cimb ar2011 (fs)

333
We hope you enjoyed the play on words on our 2011 Annual Report cover. Here at CIMB we are proud of our red corporate colour and we are also focused on ‘Redefining ASEAN For You’. The nations of ASEAN are CIMB’s home space, where we have extensive local knowledge and a competitive advantage. ‘ASEAN For You’ is our new corporate tagline, reflecting our confidence in operating across borders and our expansion into eight of the 10 ASEAN countries. When we talk about ‘Redefining ASEAN For You’, we are talking about opening up opportunities in the region. We are enabling ASEAN customers to look cross border, to invest wider and to trade more with each other. We are also positioning ourselves to be the first port of call for investors considering a business proposition in the region. We have a network of over 1,000 branches and more than 40,000 staff in ASEAN to facilitate this connectivity, to expand business opportunities and to catalyse economic integration and we look forward to reaching our Vision 2015 to be The Leading ASEAN Franchise. ASEAN FOR YOU RED EFINING ANNUAL REPORT 2011 FINANCIAL STATEMENTS

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Page 1: Cimb Ar2011 (Fs)

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We hope you enjoyed the play on words on our 2011 annual report cover. Here at CIMB we are proud of our red corporate colour and we are also focused on ‘Redefining ASEAN For You’.

The nations of ASEAN are CIMB’s home space, where we have extensive local knowledge and a competitive advantage. ‘ASEAN For You’ is our new corporate tagline, reflecting our confidence in operating across borders and our expansion into eight of the 10 ASEAN countries.

When we talk about ‘Redefining ASEAN For You’, we are talking about opening up opportunities in the region. We are enabling ASEAN customers to look cross border, to invest wider and to trade more with each other. We are also positioning ourselves to be the first port of call for investors considering a business proposition in the region.

We have a network of over 1,000 branches and more than 40,000 staff in ASEAN to facilitate this connectivity, to expand business opportunities and to catalyse economic integration and we look forward to reaching our Vision 2015 to be The Leading ASEAN Franchise.

ASEAN FOR YOUREDEFINING

ASEAN FOR YOUREDEFINING

ANNUAL REPORT 2011

FINANCIAL STATEMENTS

Page 2: Cimb Ar2011 (Fs)

FRIDAY25 FEBRUARY 2011Announcement of the unaudited consolidated financial results for the fourth quarter and financial year ended 31 December 2010

FRIDAY25 FEBRUARY 2011Notice of book closure for single tier interim dividend of 8 sen per share for the financial year ended 31 December 2010

TUESDAY15 MARCH 2011Date of entitlement for the single tier interim dividend of 8 sen per share for the financial year ended 31 December 2010

WEDNESDAY30 MARCH 2011Payment of the single tier interim dividend of 8 sen per share for the financial year ended 31 December 2010

WEDNESDAY30 MARCH 2011 Notice of 54th Annual General Meeting (AGM) and issuance of Annual Report for the financial year ended 31 December 2010

FRIDAY22 APRIL 201154th Annual General Meeting of CIMB Group Holdings Berhad

WEDNESDAY25 MAY 2011Announcement of the unaudited consolidated financial results for the first quarter ended 31 March 2011

TUESDAY23 AUGUST 2011Announcement of the unaudited consolidated financial results for the second quarter and half year ended 30 June 2011

TUESDAY23 AUGUST 2011Notice of book closure for the single tier interim dividend of 12.0 sen per share for the financial year ended 31 December 2011

MONDAY12 SEPTEMBER 2011Date of entitlement for the single tier interim dividend of 12.0 sen per share for the financial year ended 31 December 2011

FRIDAY30 SEPTEMBER 2011Payment of the single tier interim dividend of 12.0 sen per share for the financial year ended 31 December 2011

TUESDAY15 NOVEMBER 2011Announcement of the unaudited consolidated financial results for the third quarter ended 30 September 2011

CALENDAR2011

FINANCIALCore Philosophies of the Group

CREATINGVALUEENABLING OURPEOPLEACTING WITHINTEGRITY

Page 3: Cimb Ar2011 (Fs)

Contents

FINANCIALSTATEMENTS

002 Five Year Group Financial Highlights

004 Group Financial Highlights

005 Simplified Group Balance Sheet

006 Capital Management

010 Value Added Statement

011 Statement of Directors Responsibilities

012 Directors’ Report

019 Statement by Directors

019 Statutory Declaration

020 Independent Auditors’ Report

022 Consolidated Statements of

Financial Position

024 Consolidated Statements of Income

025 Consolidated Statements of

Comprehensive Income

026 Company Statements of Financial Position

027 Company Statements of Income

027 Company Statements of Comprehensive

Income

028 Consolidated Statements of Changes in

Equity

030 Company Statements of Changes in Equity

031 Consolidated Statements of Cash Flows

033 Company Statements of Cash Flows

035 Summary of Significant Group Accounting

Policies

057 Notes to the Financial Statements

246 Basel II Pillar 3 Disclosures

Page 4: Cimb Ar2011 (Fs)

002Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Five Year Group Financial Highlights

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

759

239,

983,

999

269,

365,

244

300,

152,

709

08 09 10 11 07

139,

751,

258

160,

543,

494

189,

013,

918

212,

937,

821

234,

897,

451

08 09 10 11 07

15,7

10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

04,0

58

117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

808 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

759

239,

983,

999

269,

365,

244

300,

152,

709

08 09 10 11 07

139,

751,

258

160,

543,

494

189,

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212,

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821

234,

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451

08 09 10 11 07

15,7

10,0

51

17,0

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03 20,3

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14

23,2

29,9

66

25,9

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70

08 09 10 1107

95,9

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58

117,

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074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

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239

207,

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239,

983,

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269,

365,

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300,

152,

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08 09 10 11 07

139,

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189,

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212,

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234,

897,

451

08 09 10 11 07

15,7

10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

04,0

58

117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

759

239,

983,

999

269,

365,

244

300,

152,

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08 09 10 11 07

139,

751,

258

160,

543,

494

189,

013,

918

212,

937,

821

234,

897,

451

08 09 10 11 07

15,7

10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

04,0

58

117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

2011 2010 2009 2008 2007

1 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (RM’000)

(i) Net interest income 6,676,251 6,537,277 6,068,906 4,660,596 4,395,930(ii) Net non-interest income 5,445,778 5,273,428 4,414,245 2,961,777 4,523,785(iii) Profit before allowances ^ 5,492,117 5,264,899 4,931,304 3,597,155 4,762,294(iv) Profit before taxation ^ 5,203,142 4,626,717 3,791,293 2,694,107 3,664,550(v) Net profit for the financial year ^ 4,030,798 3,500,803 2,786,232 1,930,486 2,772,020

2 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (RM’000)

Assets

(i) Total assets 300,152,709 269,365,244 239,983,999 207,090,759 182,801,239(ii) Loans, advances and financing 183,838,777 159,181,385 142,191,673 117,382,074 95,904,058

Liabilities and Shareholders’ Fund (RM’000)

(i) Total deposits 234,897,451 212,937,821 189,013,918 160,543,494 139,751,258(ii) Paid-up capital 7,432,775 7,432,775 3,531,766 3,578,078 3,374,181(iii) Total shareholders’ fund 25,936,470 23,229,966 20,345,014 17,099,203 15,710,051

Total IncomeRM’000

Profit Before TaxationRM’000

Profit After TaxationRM’000

Net Earnings Per ShareSen

Page 5: Cimb Ar2011 (Fs)

003 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Five Year Group Financial Highlights

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 11073,

664,

550

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

759

239,

983,

999

269,

365,

244

300,

152,

709

08 09 10 11 07

139,

751,

258

160,

543,

494

189,

013,

918

212,

937,

821

234,

897,

451

08 09 10 11 07

15,7

10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

04,0

58

117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

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239,

983,

999

269,

365,

244

300,

152,

709

08 09 10 11 07

139,

751,

258

160,

543,

494

189,

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918

212,

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821

234,

897,

451

08 09 10 11 07

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10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

04,0

58

117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

759

239,

983,

999

269,

365,

244

300,

152,

709

08 09 10 11 07

139,

751,

258

160,

543,

494

189,

013,

918

212,

937,

821

234,

897,

451

08 09 10 11 07

15,7

10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

04,0

58

117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

07

8,91

9,71

5

7,62

2,37

3

10,4

83,1

51

11,8

10,7

05

12,1

22,0

29

08 09 10 11 07

2,77

2,02

0

1,93

0,48

6

2,78

6,23

2 3,50

0,80

3

4,03

0,79

8

08 09 10 11 07

41.6

2

28.5

9

39.4

7

48.7

2

54.2

3

08 09 10 1107

3,66

4,55

0

2,69

4,10

7

3,79

1,29

3 4,62

6,71

7

5,20

3,14

2

08 09 10 11

07

182,

801,

239

207,

090,

759

239,

983,

999

269,

365,

244

300,

152,

709

08 09 10 11 0713

9,75

1,25

8

160,

543,

494

189,

013,

918

212,

937,

821

234,

897,

451

08 09 10 11 07

15,7

10,0

51

17,0

99,2

03 20,3

45,0

14

23,2

29,9

66

25,9

36,4

70

08 09 10 1107

95,9

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117,

382,

074

142,

191,

673

159,

181,

385

183,

838,

777

08 09 10 11

2011 2010 2009 2008 2007

3 PER SHARE

(i) Gross earnings (sen) Δ ^ 70.00 64.38 53.70 39.90 55.02(ii) Net earnings (sen) Δ ^ 54.23 48.72 39.47 28.59 41.62(iii) Net tangible asset (RM) 2.15 1.81 3.09 2.52 3.17(iv) Gross dividend (sen) * 20.00 36.58 25.00 25.00 40.00

4 FINANCIAL RATIO (%)

(i) Return on average equity ^ 16.4 16.19 14.88 11.77 19.89

Δ Based on the weighted average number of 7,432,772,000 (2010: 7,186,034,000) ordinary share of RM1.00 each in issue during the financial year ended 31 December 2011.

* Gross dividend is computed based on the actual payment made in the respective financial years.

^ The comparative periods have been restated to reflect the adoption of Amendment to FRS 2.

Additonal information:

Total income 12,122,029 11,810,705 10,483,151 7,622,373 8,919,715Profit After Tax ^ 4,030,798 3,500,803 2,786,232 1,930,486 2,772,020Total Assets 300,152,709 269,365,244 239,983,999 207,090,759 182,801,239

Total AssetsRM’000

Loans, Advances and FinancingRM’000

Total DepositsRM’000

Shareholders’ FundsRM’000

Page 6: Cimb Ar2011 (Fs)

004Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Group Financial Highlights

Consolidated Statements of Income and Consolidated Statements of Financial Position

Financial Year Ended 31 December Changes

2011RM’000

2010RM’000

2009RM’000

2008RM’000

2007RM’000

2010%

2009%

2008%

Net interest income 6,676,251 6,604,775 6,068,906 4,660,596 4,395,930 8.83 30.22 6.02Net non-interest income 5,445,778 5,273,428 4,414,245 2,961,777 4,523,785 19.46 49.04 (34.53)Overheads ^ 6,629,912 6,613,304 5,551,847 4,025,217 4,248,367 19.12 37.93 (5.25)Profit before allowances ^ 5,492,117 5,264,899 4,931,304 3,597,155 4,762,294 6.76 37.09 (24.47)Allowance for impairment losses on loans, advances and financing 487,343 607,176 1,022,605 794,715 1,127,431 (40.62) 28.68 (29.51)Profit before taxation ^ 5,203,142 4,626,717 3,791,293 2,694,107 3,664,550 22.04 40.73 (26.48)Net profit for the financial year ^ 4,030,798 3,500,803 2,786,232 1,930,486 2,772,020 25.65 44.33 (30.36)Gross dividends paid 1,486,555 1,992,167 881,865 836,868 1,346,833 125.90 5.38 (37.86)Loans, advances and financing 183,838,777 159,181,385 142,191,673 117,382,074 95,904,058 11.95 21.14 22.40Total assets 300,152,709 269,365,244 239,983,999 207,090,759 182,801,239 12.24 15.88 13.29Deposits from customers 221,933,142 199,845,664 178,882,336 146,890,210 126,866,791 11.72 21.78 15.78Total liabilities 273,289,549 245,062,045 217,337,285 188,278,166 165,946,629 12.76 15.43 13.46Shareholders’ fund ^ 25,936,470 23,229,966 20,345,014 17,099,203 15,710,051 14.18 18.98 8.84Commitments and contingencies 414,197,407 349,069,257 322,892,443 321,678,842 267,168,733 8.11 0.38 20.40

RatiosCore capital ratio (CIMB Bank) ^ 15.26 14.47 14.81 10.75 9.36 (2.30) 37.77 14.85Risk-weighted capital ratio (CIMB Bank) ^ 17.59 15.36 15.06 13.90 12.46 1.99 8.35 11.56Return on average equity ^ 16.4 16.19 14.88 11.77 20.05 8.80 26.42 (41.30)Retun on total assets 1.34 1.30 1.16 0.93 1.52 11.94 24.55 (38.53)Cost to income ratio 54.69 55.68 52.96 52.81 47.63 5.13 0.29 10.87Cost to total assets 2.21 2.46 2.31 1.94 2.32 6.13 19.02 (16.37)Gross impaired/non-performing loans to gross loans 5.11 6.14 4.98 4.94 7.25 23.26 0.79 (31.86)Loan loss coverage ratio 81.12 81.12 90.76 88.05 69.30 (10.63) 3.08 27.06Loan deposit ratio 82.84 79.65 79.49 79.91 75.59 0.21 (0.53) 5.71Equity to assets 8.64 8.62 8.48 8.26 8.59 1.73 2.67 (3.92)Equity to loans 14.11 14.59 14.31 14.57 16.38 1.99 (1.78) (11.07)

Other informationEarnings per share (sen)– basic *^ 54.23 48.72 39.47 28.59 41.62 23.44 38.03 (31.30)– fully diluted* n/a n/a n/a 28.88 41.89 n/a n/a (31.05)Net tangible assets per share (RM) 2.15 1.81 3.09 2.52 3.17 (41.31) 22.53 (20.55)Gross dividend per share (sen) 20.00 36.58 25.00 25.00 40.00 46.30 – (37.50)Number of shares in issue (‘000) 7,432,775 7,432,775 3,531,766 3,578,078 3,374,181 110.45 (1.29) 6.04Weighted average number of shares in issue (‘000) 7,432,772 7,186,034 7,059,934 6,751,796 3,330,288 1.79 4.56 102.74Share price at year-end (RM) 7.44 8.50 12.84 5.85 11.00 (33.80) 119.49 (46.82)Number of employees 40,244 36,984 35,922 31,932 25,614 2.96 12.50 24.67

The Bank has applied paragraph 7.2 of Risk Weighted Capital Adequacy Framework (Basel II) – Disclosure Requirements (Pillar 3) dated 5 February 2010, where the Bank is exempted from disclosing comparative figures in the previous reporting periods.

^ The comparative periods have been restated to reflect the adoption of Amendment to FRS 2.

Page 7: Cimb Ar2011 (Fs)

005 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Simplified Group Balance Sheet

61.2

73.9

74.2

0.3

0.15.9

2.8

5.2

6.8

4.9

0.2

0.16.2

2.5

5.8

6.7

4.7

14.3

59.1

0.5 7.3

15.9

17.2

16.2

6.51.7

2011

2010

2011

2010

61.2

73.9

74.2

0.3

0.15.9

2.8

5.2

6.8

4.9

0.2

0.16.2

2.5

5.8

6.7

4.7

14.3

59.1

0.5 7.3

15.9

17.2

16.2

6.51.7

2011

2010

2011

2010

2011 2010

Cash and balances with banks and reverse repurchase agreements

14.3% 15.9%

Portfolio of financial investments

16.2% 17.2%

Loans, advances and financing

61.2% 59.1%

Statutory deposits with Central Banks

1.7% 0.5%

Other assets (including intangible assets)

6.5% 7.3%

2011 2010

Deposits from customers 73.9% 74.2%

Deposits from banks 4.7% 4.9%

Bills and acceptances payable and other liabilities

6.7% 6.8%

Debt securities issued and other borrowed funds

5.8% 5.2%

Share capital 2.5% 2.8%

Reserves 6.2% 5.9%

Preference shares 0.1% 0.1%

Non-controlling interests 0.2% 0.3%

ASSETS

LIABILITIES & EqUITY

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CIMB GROUP HOLDINGS BERHAD

Capital ManagementFRAMEwORk

CIMB Group has always maintained a strong capital position that consistently ensures an optimal capital structure to meet the requirements of its various stakeholders, including customers, shareholders, regulators and external rating agencies. This has enabled the Group to firmly support the demands for capital for organic growth of its core businesses through economic cycles including market shocks and stressed conditions, take advantage of opportunities in strategic acquisitions as well as new businesses, tap the capital markets to enhance and diversify sources of capital, and provide a stable dividend payout to its shareholders.

The Group’s capital management practice is underpinned by a capital management framework with the following objectives:

• Tomaintain a strong capital base tomeet regulatory capital requirements at all times.

• To optimise returns to shareholders through providing sustainable return on equity and stable dividend payout.

• To retain optimal levels of capital to support the organic growth of core businesses and expansion into new businesses.

• Tomaintain strong credit ratings from external rating agencies.

• Tomaintain a robust capital base to be able to withstand stress scenarios.

• To remain flexible to take advantage of strategic acquisitions to enhance theGroup’s franchise value.

• To ensure a capital position that is able to meet the requirements of various other stakeholders of the Group (e.g. customers, corporate responsibilitycommitments, etc.).

The Group has maintained a healthy capital base over the years and actively tapped alternative capital from local as well as overseas markets. The Group has issued non-dilutive guaranteed preference shares, tax deductible non-dilutive innovative and non-innovative Tier 1 capital and Tier 2 subdebt, to achieve an optimal mix of capital which met the objectives of the capital management framework and also facilitated several major acquisitions such as the merger between PT Bank Niaga Tbk and PT Bank Lippo Tbk, acquisition of Bank of Yingkou Co. Ltd. and BankThai Public Company Limited and at the same time, enabled a good record of return on equity as well as dividend payout to its shareholders. More details of the types of capital instruments issued can be found on pages 113 to 122.

FY2007RM million

FY2008RM million

FY2009RM million

FY2010RM million

FY2011RM million

Total shareholders’ funds 15,710 17,099 20,345 23,230 25,936Long term debt/hybrid capital 8,282 10,421 10,893 14,743 18,144Net profit for the financial year ^ 2,772 1,930 2,786 3,501 4,031Return on average equity ^ 19.89% 11.77% 14.88% 16.19% 16.40%Gross dividend (sen) * 40.0 25.0 25.0 36.58 20.00

* Gross dividend is computed based on actual payment made in the respective financial years.^ The comparative periods have been restated to reflect the adoption of Amendment to FRS 2.

The Group’s regulated banking entities have always maintained a high set of internal targets (which provide a buffer) above the minimum regulatory requirements. The table below shows the relevant capital ratios of each of the regulated banking entities of the Group in comparison to the minimum level required by the respective central banks.

Core Tier 1 Tier 1 RwCR

As at31 December

2011

MinimumRegulatory

Ratio

As at31 December

2011

MinimumRegulatory

Ratio

As at31 December

2011

MinimumRegulatory

Ratio

CIMB Bank 11.87% 2.00% 14.45% 4.00% 16.78% 8.00%CIMB Investment Bank 16.29% 2.00% 16.29% 4.00% 16.29% 8.00%CIMB Islamic 10.44% 2.00% 10.44% 4.00% 14.42% 8.00%CIMB Niaga N/A N/A 10.17% N/A 13.09% 8.00%CIMB Thai N/A N/A 7.65% 4.25% 13.00% 8.50%

The advent of the global financial crisis has necessitated more stringent rules on capital requirements for financial institutions which are being implemented by regulators in phases.

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CIMB GROUP HOLDINGS BERHAD

Capital Management

BASEL III GUIDELINES

On 16 December 2011, Bank Negara Malaysia (BNM) issued a notification on Basel III. The notification sets out BNM’s approach to incorporating the individual elements of the Basel III reform package into the domestic regulatory and supervisory framework, as well as its expectations of banking institutions with respect to managing the transition towards the new regime.

The Basel Committee finalised a package of measures to strengthen global capital and liquidity rules for financial institutions in December 2010 which include:

• Enhancing the definition of capital.

• Raising theminimum capital requirements and introducing capital buffers.

• Enhancing the risk coverage of the capital framework.

• Implementation of the LeverageRatiowhich requires aminimum of 3% calculated based on Tier 1 capital over total assets, off balance sheet items andnet derivatives.

• Additional loss absorbency requirements for systemically important financial institutions.

• Implementation of Liquidity Coverage Ratio and Net Stable Funding Ratio.

BNM has indicated that it will support the globally-agreed levels and implementation timeline which provides for gradual phase-in of the standards beginning 2013 until 2019 as shown in the table below.

Phase-in Arrangements 2012 2013 2014 2015 2016 2017 2018 2019

Leverage Ratio Observation period reporting Standard in force

Minimum common equity capital ratio 3.5% 4.0% 4.5% 4.5% 4.5% 4.5% 4.5%

Capital conservation buffer 0.625% 1.25% 1.875% 2.5%

Minimum common equity + conservation buffer

3.5% 4.0% 4.5% 5.125% 5.75% 6.375% 7.0%

Minimum tier 1 capital 4.5% 5.5% 6.0% 6.0% 6.0% 6.0% 6.0%

Minimum tier 1 capital + conservation buffer

4.5% 5.5% 6.0% 6.625% 7.250% 7.875% 8.5%

Minimum total capital 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Minimum total capital + conservation buffer

8.0% 8.0% 8.0% 8.625% 9.25% 9.875% 10.5%

Capital instruments that no longer qualify as non-core tier 1 or tier 2 capital

Phased out over a 10 year horizon beginning 2013

Liquidity Coverage Ratio Observation period reporting Standard in force

Net Stable Funding Ratio Observation period reporting Standard in force

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008Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Capital Management

PILLAR 2 – INTERNAL CAPITAL ADEqUACY ASSESSMENT PROCESS (ICAAP)

The Group has implemented its internal economic capital framework since 2001, whereby capital is allocated to all business units for its risk-taking purposes. The Group’s existing economic capital framework is being refined to include other risks, in line with the requirements of BNM’s RWCAF-ICAAP (Pillar 2) for banks adopting the Internal Ratings-Based (IRB) approach to develop a robust risk management framework to assess the adequacy of its internal economic capital in relation to the risk profile.

The objective of Pillar 2 is to ensure that banking institutions have adequate capital to support their operations at all times. It also promotes the adoption of a more forward looking approach to capital management and encourages banking institutions to develop and employ more rigorous risk management techniques. In line with these Pillar 2 guidelines, the Group has submitted its action plans and gaps assessments to BNM and has also established a dedicated ICAAP Working Group to implement the Pillar 2 program which is being driven by Group Risk Management, supported by Capital and Balance Sheet Management and Group Finance for capital allocation and performance measurement review and analysis.

PILLAR 2

SUPERVISORY REVIEW PROCESS MARKET DISCIPLINEMININUM CAPITAL REQUIREMENTS

PILLAR 3PILLAR 1

Methodologies/Approaches:

1. Credit Risk

2. Market Risk

3. Operational Risk

1. Bank to have internal capital adequacy assessment process (ICAAP)

2. Supervisory review and action

3. Bank to operate above minimum capital ratio

4. Early intervention of regulator

Disclosure requirements:

General Qualitative & Quantitative Disclosures (Scope of application, capital structure, capital adequacy, credit risk, credit risk mitigation, market risk, operational risk, etc.)

� �

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009 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Capital Management

The ICAAP Framework that the Group is working towards comprises 5 main elements:

• Governance by the Board and Senior Management: The Board and Senior Management are responsible to ensure that capital levels in the Group are proportionate to the level and complexity of the inherent material risks in the Group.

• Comprehensive Risk Assessment: Comprehensive risk assessment involves considering the potential financial or reputational impact of material risks on the Group. Material risks can be measureable or non-measurable and are identified, evaluated, measured, mitigated and monitored/reported on a regular basis according to the Group’s risk management process.

• Economic Capital Computation and Allocation: Each year, capital will be allocated to each business unit based on the respective business plan, budgeted profit and targeted Risk Adjusted Return On Capital (RAROC).

• Sound Capital Management: The internal capital targets for the Group are recommended and set by the Group Executive Committee and approved by the relevant Board of Directors on an annual basis.

• Capital Adequacy Assessment: In assessing its regulatory and economic capital adequacy, the Group adopts several methodologies, including stress tests which are integrated into the Group’s risk management process. Each methodology used to assess and quantify material risks are validated by an independent team and periodically reviewed by Group Internal Audit. Capital utilisation and the Group’s overall regulatory and economic capital positions are monitored and reported to the Group Risk Committee and Board Risk Committee on a monthly basis.

kEY INITIATIVES

Following the re-organisation of CIMB Group in 2011, the Group has strengthened its capital management process through the establishment of a new, centralised and independent unit called Capital and Balance Sheet Management (CBSM). This unit has oversight from the Group EXCO and is charged with maintaining discipline over investment and capital allocation decisions and implementing key initiatives to better position the Group amidst the changing competitive, regulatory and social landscape.

Working closely with various other divisions of the Group (e.g. Group Risk Management, Group Finance and the Business Units), some of the key initiatives of CBSM include:-

• Formalising the annual capital planning exercise through a forward-looking capital plan that forecasts capital demands and assesses capital adequacy,taking into account the Group’s strategy, operating environment of its business in different jurisdictions, target capital ratios and composition and expectations of stakeholders.

• Periodic reviewof the capital plan to ensure internal capital targets canbemet and to realign theplanwhere necessary, in preparationof implementationof any new capital requirements from the various stakeholders

• Allocating capital to businesses on the basis of their economic profit generation, regulatory capital requirements and cost of capital based on BNM’sRWCAF-ICAAP (Pillar 2) framework. This is to ensure that the returns on investments are adequate after taking into account the cost of capital and commensurate with the risks undertaken.

• Enhancement of risk-based stress testing tomaintain an optimal capital capacity for loss absorption.

• Activemanagement of capital to strengthen and optimise the capital base through asset securitisation, sale of non-core assets and non-performing loansand other initiatives that will free up capital.

• Continuous capital planning, including assessing the feasibility of new issuance of Basel 3 compliant capital instruments and/or capital relief exercises tomanage capital adequacy on a sustainable basis and taking into consideration the new capital adequacy framework under Basel 3 which will commence from 1 January 2013.

The Group is confident that given its healthy capital position and strengthened capital management governance and framework, it is well-placed to meet the requirements of the various stakeholders of the Group (including customers, shareholders, regulators and external rating agencies) amidst the changing competitive, regulatory and social environment.

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010Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Value Added Statement

2011RM’000

2010RM’000

Value addedNet interest income 6,676,251 6,604,775Income from Islamic banking operations 1,470,321 1,330,036Non-interest income 3,975,457 3,943,392Overheads excluding personnel costs and depreciation (2,779,772) (2,946,346)Allowances for impairment losses on loans, advances and financing (487,343) (607,176)Other allowances written back/(made) 47,337 (127,174)Share of results of jointly controlled entities 16,993 9,548Share of results of associates 134,038 86,620

Value added available for distribution 9,053,282 8,293,675

Distribution of Value AddedTo employees: Personnel costs 3,517,935 3,321,563To the Government: Taxation 1,128,816 956,830To providers of capital: Dividends paid to shareholders 1,486,555 1,992,167 Minority interest 43,528 169,084To reinvest to the Group: Depreciation 332,205 345,395 Retained profit 2,544,243 1,508,636

Value added available for distribution 9,053,282 8,293,675

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011 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Statement of Directors’ ResponsibilitiesIn Relation to Financial Statements

Pursuant to paragraph 15.26(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and as required by Companies Act, 1965 (the Act), the Directors are responsible to ensure that the financial statements prepared for each financial year, give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and cashflows for the year then ended. As required by the Act and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the financial statements have been prepared in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Act.

The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2011, the Group and the Company have used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and ensured that all applicable approved accounting standards have been followed and confirm that the financial statements have been prepared on a going concern basis.

The Directors are responsible for ensuring that the Group and the Company maintains adequate accounting records which disclose with reasonable accuracy the financial position of the Group and the Company to enable them to ensure that the financial statements comply with the requirements of the Act.

The Directors have a general duty to take such steps as are reasonably available to them to safeguard the assets of the Group and the Company, and to prevent and detect fraud and other irregularities.

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012Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

The Directors have pleasure in submitting their Report and the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2011.

PRINCIPAL ACTIVITIES

The principal activity of the Company during the financial year is investment holding. The principal activities of the significant subsidiaries as set out in Note 12 to the Financial Statements, consist of commercial banking, investment banking, Islamic banking, offshore banking, debt factoring, trustee and nominee services, property ownership and management, management of unit trust funds and fund management business, stock and sharebroking and the provision of other related financial services. There was no significant change in the nature of these activities during the financial year.

FINANCIAL RESULTS

The GroupRM’000

The CompanyRM’000

Net profit after taxation attributable to:

– Owners of the Parent 4,030,798 1,504,611– Non-controlling interests 43,528 –

4,074,326 1,504,611

DIVIDENDS

The dividends on ordinary shares paid or declared by the Company since 31 December 2010 were as follows:

RM’000

In respect of the financial year ended 31 December 2010:

Dividend on 7,432,772,311 ordinary shares, paid on 31 March 2011– single tier second interim dividend of 8.0 sen per ordinary share 594,622

In respect of the financial year ended 31 December 2011:

Dividend on 7,432,771,757 ordinary shares, paid on 30 September 2011– single tier interim dividend of 12.0 sen per ordinary share 891,933

The Directors have declared a single tier second interim dividend of 10 sen per ordinary share, on 7,432,771,631 ordinary shares amounting to RM743,277,163 in respect of the financial year ended 31 December 2011. The single tier second interim dividend was approved by the Board of Directors on 27 February 2012.

The Directors do not recommend the payment of any final dividend for the financial year ended 31 December 2011.

RESERVES, PROVISIONS AND ALLOwANCES

There were no material transfers to or from reserves or provisions or allowances during the financial year other than those disclosed in the Financial Statements and Notes to the Financial Statements.

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013 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

ISSUANCE OF SHARES

There were no changes to the authorised, issued and paid-up capital of the Company during the financial year.

SHARE BUY-BACk AND CANCELLATION

The shareholders of the Company, had via an ordinary resolution passed at the Annual General Meeting held on 22 April 2011, approved the Company’s plan and mandate to authorise the Directors of the Company to buy back up to 10% of its existing paid-up share capital. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the share buy-back can be applied in the best interest of the Company and its shareholders.

During the financial year, the Company bought back 1,004 shares, as stated in Note 30(b) to the Financial Statements, at an average price of RM8.60 per share from the open market using internally generated funds. As at 31 December 2011, there were 3,004 ordinary shares held as treasury shares. Accordingly, the adjusted issued and paid-up share capital of the Company with voting rights as at 31 December 2011 was 7,432,771,642 shares.

The shares purchased are held as treasury shares in accordance with the provisions of Section 67A of the Companies Act, 1965.

SHARE-BASED EMPLOYEE BENEFIT PLAN

The Group’s employee benefit schemes are explained in Note 42 to the Financial Statements.

BAD AND DOUBTFUL DEBTS, AND FINANCING

Before the Financial Statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and financing and the making of allowance for doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and that adequate allowance had been made for doubtful debts and financing.

At the date of this Report, the Directors are not aware of any circumstances which would render the amounts written off for bad debts and financing, or the amount of the allowance for doubtful debts and financing in the Financial Statements of the Group and of the Company, inadequate to any substantial extent.

CURRENT ASSETS

Before the Financial Statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that any current assets, other than debts and financing, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise.

At the date of this Report, the Directors are not aware of any circumstances which would render the values attributed to current assets in the Financial Statements of the Group and of the Company misleading.

VALUATION METHODS

At the date of this Report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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014Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

CONTINGENT AND OTHER LIABILITIES

At the date of this Report, there does not exist:

(a) any charge on the assets of the Group or the Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group or the Company which has arisen since the end of the financial year other than in the ordinary course of business.

No contingent or other liability in the Group or the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this Report, the Directors are not aware of any circumstances not otherwise dealt with in this Report or the Financial Statements of the Group and of the Company, that would render any amount stated in the Financial Statements misleading.

ITEMS OF AN UNUSUAL NATURE

In the opinion of the Directors:

(a) the results of the Group’s and the Company’s operations for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in Notes 46 and 52 to the Financial Statements; and

(b) there has not arisen in the interval between the end of the financial year and the date of this Report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Company for the financial year in which this Report is made.

DIRECTORS

The Directors of the Company who have held office since the date of the last report and at the date of this report are as follows:

Tan Sri Dato’ Md Nor bin Md YusofDato’ Sri Mohamed Nazir bin Abdul RazakDato’ Zainal Abidin bin PutihDato’ Hamzah bin BakarDatuk Dr Syed Muhamad bin Syed Abdul KadirDato’ Robert Cheim Dau MengCezar Peralta ConsingGlenn Muhammad Surya YusufWatanan PetersikKatsumi Hatao (Appointed on 23 February 2012)Tan Sri Dato‘ Seri Haidar bin Mohammed Nor (retired on 22 April 2011)Dato’ Mohd Shukri bin Hussin (Resigned on 31 December 2011)Hiroyuki Kudo (Resigned on 23 February 2012)

In accordance with Article 76 of the Articles of Association, the following Directors retire from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election:

Dato’ Hamzah bin BakarDato’ Zainal Abidin bin PutihDatuk Dr Syed Muhamad bin Syed Abdul Kadir

In accordance with Article 83 of the Article of Association, Katsumi Hatao retires from the Board at the forthcoming Annual General Meeting and being eligible, offers himself for re-election.

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015 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

DIRECTORS’ INTERESTS IN SHARES, SHARE OPTIONS AND DEBENTURES

According to the Register of Directors’ Shareholdings, the beneficial interests of Directors who held office at the end of the financial year in the shares, share options and debentures of the Company during the financial year are as follows:

No. of ordinary shares of RM1 each

As at1 January

Acquired/Granted Disposed

As at31 December

CIMB Group Holdings BerhadDirect interest Tan Sri Dato’ Md Nor bin Md Yusof 400,000 – – 400,000* Dato’ Sri Mohamed Nazir bin Abdul Razak 54,926,522 469,353** – 55,395,875^ Dato’ Zainal Abidin bin Putih 110,000 – – 110,000 Dato’ Robert Cheim Dau Meng 100,000 15,592** – 115,592

Note: Includes shareholding of spouse/child, details of which are as follows:

No. of ordinary shares of RM1 each

As at1 January Acquired Disposed

As at31 December

* Dato’ Azlina binti Abdul Aziz 8,000,000 – – 8,000,000^ Datin Jasmine binti Abdullah Heng 20,000 – – 20,000^ Mohamad Ari Zulkarnain bin Zainal Abidin 10,000 – – 10,000

** Shares granted under Equity Ownership Plan (“EOP”)

No. of debentures held

As at1 January

Acquired/Granted Disposed

As at31 December

CIMB Group Holdings Berhad– Subordinated Fixed Rate NotesDato’ Robert Cheim Dau Meng RM1,000,000 – – RM1,000,000

CIMB Niaga Tbk– Subordinated NotesDato’ Robert Cheim Dau Meng IDR1,000,000,000 – – IDR1,000,000,000

Other than as disclosed above, according to the Register of Directors’ Shareholdings, the Directors in office at the end of the financial year did not hold any interest in shares and options over shares in the Company, or shares, options over shares and debentures of its related corporations during the financial year.

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016Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than Directors’ remuneration disclosed in Note 37 to the Financial Statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Neither at the end of the financial year, nor at any time during the financial year, did there subsist any other arrangements to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the Management Equity Scheme and Equity Ownership Plan (see Note 42 to the Financial Statements) as disclosed in this Report.

2011 BUSINESS PLAN AND STRATEGY

CIMB Group’s overall business strategy for 2011 was reflected in its corporate theme for the year, ‘Think ASEAN’. We focused on strengthening our ASEAN identity amongst all staff, positioning ourselves as an ASEAN champion in the markets we serve and leveraging our regional platform to bring our local knowledge of ASEAN markets and our regional capabilities closer to our customers.

We began the year on a cautious note, fully aware of the uncertainties surrounding the recovery in developed economies. However, it was unlikely that anyone could have foreseen the debt crisis in Europe, political tensions in the Middle East and Northern Africa and natural disasters in Asia, and their collective impact on global investor sentiment and overall business confidence. Despite these challenges, ASEAN, our core operating market, was relatively insulated and CIMB Group still managed to post record profits and return on equity (“ROE”).

2011 was also the year the Group embraced Vision 2015 (“V15”) after having successfully achieved most of our targets of our preceding five-year transformation plan, Vision 2010. V15 represents the next growth chapter for CIMB Group where by 2015 we aspire to be The Leading ASEAN Franchise, not just amongst financial institutions, but across all industries.

We began laying the foundations for this new transformative growth phase in 2011. Following the ‘refresh’ of the Malaysian consumer bank at the beginning of the year, when we streamlined business and product lines, we initiated a realignment of our wholesale banking management platform in 3Q 2011. This re-positioning will allow the Group to optimise synergies between its various business lines, especially for large corporates, and better capitalise on investment opportunities.

We also embarked on a major re-branding exercise, changing our tagline from ‘Forward Banking’ to ‘ASEAN For You’. Aside from being a clear statement of our regional ambitions, this new tagline articulates CIMB Group’s capability to draw from its regional capabilities to deliver the best of ASEAN to our customers.

CIMB Group had a solid 2011, despite global uncertainties and subdued capital market activity. We recorded our best ever financial performance with revenue and profit before tax (“PBT”) of RM12.12 billion and RM5.20 billion, an increase of 2.1% and 12.4% respectively year on year (“Y-o-Y”). A key highlight was the outperformance of the Group’s Malaysian consumer bank where PBT surged 86.1% Y-o-Y to RM1.33 billion, primarily driven by sharply lower credit charges and lower overhead costs. PBT at Treasury & Investments improved 27.6% Y-o-Y to RM1.39 billion while Corporate & Investment Banking was 33.1% lower Y-o-Y at RM751 million due to much fewer major capital market transactions relative to 2010. CIMB Niaga’s PBT declined 2.7% Y-o-Y to RM1.53 billion due to the absence of gains arising from the sale of ex-Lippo Bank bonds which occurred in 2010. Excluding this one-off gain in 2010, CIMB Niaga’s PBT grew 27.3% Y-o-Y, driven by strong loans and deposits growth and much improved non-interest income and lower provisions. PBT at CIMB Thai increased 134% Y-o-Y to RM110 million although this was attributable to several one-off gains. Asset Management and Insurance PBT rose 5.7% Y-o-Y to RM92 million.

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017 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

2011 BUSINESS PLAN AND STRATEGY (CONTINUED)

The Group’s total gross loans expanded 14.3% Y-o-Y, underpinned by a 23.4% surge in loans growth (in RM terms) at CIMB Niaga, as well as the 11.7% increase in Malaysian consumer loans. Mortgages, credit cards and the Group’s micro credit lending grew by 14.5%, 9.0% and 78.9% respectively Y-o-Y. Commercial banking loans were 4.5% higher Y-o-Y while hire purchase loans were unchanged. Corporate loans expanded 12.8% Y-o-Y. The Group’s overall net interest margins eased to 3.12% from 3.34% the year before.

Total loan impairment for the Group declined by 19.8% Y-o-Y to RM487 million in 2011 compared to RM607 million in 2010. The Group’s gross impairment ratio continued to improve to 5.1% for 2011 from 6.1% as at end-2010, with an impairment allowance coverage of 81.1%. The Group’s cost to income ratio improved to 54.7%, compared to 55.7% the year before.

The Group met its dividend payout targets for 2011 with total 2011 dividends amounting to RM1.64 billion, or 22.0 sen per share, translating to a dividend payout ratio of 40.6% of 2011 profits. This was split into 2 interim dividend payouts of 12.0 sen and 10.0 sen which were declared in August 2011, and February 2012 respectively.

CIMB Bank’s risk weighted capital ratio stood at 16.8% while its Tier 1 capital ratio stood at 14.5% as at end-2011 (after inclusion of 2011 net profits and the proposed second interim dividend). CIMB Group’s double leverage and gearing stood at 119.1% and 21.8% respectively as at end-2011.

OUTLOOk FOR 2012

CIMB Group’s corporate theme for 2012 is CIMB 2.0: Towards Vision 2015. While we are pleased with how far the Group has come, and how much it has achieved since embarking on the journey towards regional universal banking in 2005, we are fully aware of the imperative to continuously improve our business model to sustain the excellent momentum which we have built.

Vision 2015: to be The Leading ASEAN Franchise is a clear articulation of where we want to be. It is an ambitious goal, and we recognise that we have to look beyond our current growth trajectory, and our present strengths and capabilities to achieve it. We need to evolve into CIMB 2.0, or CIMB Version 2. To this end, in 2012, we will optimise our existing franchise and improve on areas such as SME banking and cross-selling. We will build new growth areas by exploring new markets and maximising opportunities in existing ones. And we will substantiate ‘ASEAN For You’ in how we act and all that we do.

RATINGS BY ExTERNAL RATING AGENCIES

Details of the rating of the Company and its debt securities are as follows:

Rating agency Date accorded Rating classification

RAM July 2011 Long term – AA1 Short-term – P1 Outlook – Stable

Rating classification description:

RAM has assigned respective long and short-term ratings of AA1 and P1 to the Company’s RM6.0 billion Conventional and Islamic Commercial Papers and Medium-Term Notes Programmes. The long term rating has a stable outlook.

Rating agency Date accorded Rating classification

RAM July 2011 Long term – AA3 Outlook – Stable

Rating classification description:

RAM has assigned an AA3 to the Company’s RM3.0 billion Subordinated Notes Programme (2009/2074) with a long term stable outlook.

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018Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Directors’ Reportfor the financial year ended 31 December 2011

SHARIAH COMMITTEE

All the Islamic banking businesses of CIMB Group come under the purview of the CIMB Islamic Shariah Committee, which resides at CIMB Islamic Bank Berhad (“CIMB Islamic”).

As per BNM/GPS1 (Guideline on the Governance of Shariah Committee for Islamic Financial Institutions), the Shariah Committee advises the Group on the operations of its Islamic banking business to ensure that the Group is not involved in any elements/activities which are not permissible under Shariah. In advising on such matters, the Shariah Committee also considers the views of the Shariah Advisory Council/Committees of relevant authorities like Bank Negara Malaysia and the Securities Commission on issues relating to the activities and operations of Islamic banking and financing.

The members of the Shariah Committee are as follows:

1. Sheikh Professor Dr. Mohammad Hashim Kamali (Chairman)2. Sheikh Nedham Muhammad Seleh Yaqooby3. Sheikh Dr. Haji Mohd Nai’m bin Haji Mokhtar4. Sheikh Associate Professor Dr. Shafaai bin Musa5. Sheikh Dr. Yousef Abdullah Al Shubaily6. Professor Dr. Noor Inayah Yaakub (Appointed on 1 April 2011)

ZAkAT OBLIGATIONS

The obligation and responsibility for payment of Zakat lies with the Muslim shareholders of the Group. For the Group’s banking and asset management subsidiaries, the obligation and responsibility for payment of Zakat on deposits and investments lies with the Muslim depositors and investors. The aforesaid is subject to the jurisdictional requirements on Zakat payment as may be applicable from time to time arising from local legislation, regulation, law or market convention as the case may be. Accrual of zakat expenses (if any) in the financial statement of the Group is reflective of this.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 46 to the Financial Statements.

SUBSEqUENT EVENTS AFTER THE FINANCIAL YEAR END

Subsequent events after the financial year end are disclosed in Note 47 to the Financial Statements.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution.

Tan Sri Dato’ Md Nor bin Md YusofChairman

Dato’ Sri Mohamed Nazir bin Abdul RazakManaging Director

Kuala Lumpur12 March 2012

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CIMB GROUP HOLDINGS BERHAD

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965

We, Tan Sri Dato’ Md Nor bin Md Yusof and Dato’ Sri Mohamed Nazir bin Abdul Razak, being two of the Directors of CIMB Group Holdings Berhad, hereby state that, in the opinion of the Directors, the Financial Statements set out on pages 022 to 245 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and of the results and cash flows of the Group and of the Company for the financial year ended on that date, in accordance with the provisions of the Companies Act, 1965, the MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank Negara Malaysia Guidelines.

Signed on behalf of the Board of Directors in accordance with their resolution.

Tan Sri Dato’ Md Nor bin Md YusofChairman

Dato’ Sri Mohamed Nazir bin Abdul RazakManaging Director

Kuala Lumpur12 March 2012

I, Kim Kenny, being the officer primarily responsible for the financial management of CIMB Group Holdings Berhad, do solemnly and sincerely declare that the Financial Statements set out on pages 022 to 245 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

kim kenny

Subscribed and solemnly declared by the abovenamed Kim Kenny at Kuala Lumpur before me, on 12 March 2012.

Commissioner for Oath

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CIMB GROUP HOLDINGS BERHAD

Independent Auditors’ Reportto the members of CIMB Group Holdings BerhadCompany No: 50841-W (Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the Financial Statements of CIMB Group Holdings Berhad on pages 022 to 245, which comprise the statements of financial position as at 31 December 2011 of the Group and of the Company, and the statements of income, comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 55.

Directors’ Responsibility for the Financial StatementsThe Directors of the Company are responsible for the preparation of Financial Statements that give a true and fair view in accordance with the Companies Act, 1965, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank Negara Malaysia Guidelines, and for such internal control as the directors determine are necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the Financial Statements have been properly drawn up in accordance with the Companies Act, 1965, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2011 and of their financial performance and cash flows for the year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

In accordance with the requirements of the Companies Act, 1965, in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the Financial Statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 12 to the Financial Statements.

(c) We are satisfied that the Financial Statements of the subsidiaries that have been consolidated with the Company’s Financial Statements are in form and content appropriate and proper for the purposes of the preparation of the Financial Statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the Financial Statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

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Independent Auditors’ Reportto the members of CIMB Group Holdings BerhadCompany No: 50841-W (Incorporated in Malaysia)

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 56 on page 245 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the Financial Statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PricewaterhouseCoopers Mohammad Faiz bin Mohammad Azmi(No. AF: 1146) (No. 2025/03/12 (J))Chartered Accountants Chartered Accountant

Kuala Lumpur12 March 2012

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Consolidated Statements of Financial Positionas at 31 December 2011

Note2011

RM’0002010

RM’000

AssetsCash and short-term funds 2 34,668,845 27,185,260Reverse repurchase agreements 4,230,482 3,804,662Deposits and placements with banks and other financial institutions 3 4,174,012 11,745,823Financial investments at fair value through profit or loss 4 13,665,700 17,082,596Derivative financial instruments 7 4,274,073 3,577,155Financial investments available-for-sale 5 13,773,219 11,658,702Financial investments held-to-maturity 6 16,918,784 14,120,263Loans, advances and financing 8 183,838,777 159,181,385Other assets 9 6,518,355 7,353,522Deferred tax assets 10 49,998 15,269Tax recoverable 139,258 98,358Statutory deposits with central banks 11 5,084,105 1,410,436Investment in associates 13 1,169,387 508,807Investment in jointly controlled entities 14 188,479 171,486Property, plant and equipment 15 1,458,400 1,442,948Investment properties 16 8,653 61,216Prepaid lease payments 17 170,564 185,542Goodwill 18 8,242,489 8,151,432Intangible assets 19 1,611,879 1,551,332

300,185,459 269,306,194Non-current assets held for sale 51 17,248 59,050

Total assets 300,202,707 269,365,244

LiabilitiesDeposits from customers 20 221,933,142 199,845,664Deposits and placements of banks and other financial institutions 21 12,964,309 13,092,157Repurchase agreements 1,067,946 33,087Derivative financial instruments 7 4,217,291 3,748,516Bills and acceptances payable 7,566,691 4,532,446Other liabilities 22 6,827,810 8,624,668Deferred tax liabilities 10 134,285 12,124Current tax liabilities 483,820 322,789Amount due to Cagamas Berhad – 107,523Bonds 24 521,225 423,982Other borrowings 25 5,324,032 3,783,587Subordinated notes 26 11,417,980 9,675,340Non-cumulative guaranteed and redeemable preference shares 28(a), 28(b) 881,016 860,162

Total liabilities 273,339,547 245,062,045

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Consolidated Statements of Financial Positionas at 31 December 2011

Note2011

RM’0002010

RM’000

EquityCapital and reserves attributable to owners of the ParentOrdinary share capital 27 7,432,775 7,432,775Reserves 29 18,504,288 15,797,775Less: Shares held under trust 30(a) (563) (563) Treasury shares, at cost 30(b) (30) (21)

25,936,470 23,229,966Perpetual preference shares 28(c) 200,000 200,000Non-controlling interests 726,690 873,233

Total equity 26,863,160 24,303,199

Total equity and liabilities 300,202,707 269,365,244

Commitments and contingencies 7 414,197,407 349,069,257

Net assets per share attributable to owners of the Parent (RM) 3.49 3.13

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Consolidated Statements of Incomefor the financial year ended 31 December 2011

Note2011

RM’0002010

RM’000

Interest income 31 12,681,512 11,168,858Interest expense 32 (6,005,261) (4,564,083)

Net interest income 6,676,251 6,604,775Income from Islamic banking operations 54 1,470,321 1,330,036Net non-interest income 33 3,975,457 3,943,392

12,122,029 11,878,203Overheads 34 (6,629,912) (6,613,304)

Profit before allowances 5,492,117 5,264,899Allowance made for impairment losses on loans, advances and financing 35 (487,343) (607,176)Allowance made for impairment losses on other receivables (8,908) (8,085)Allowance written back/(made) for commitments and contingencies 22 55,435 (20,900)Recoveries/(losses) from investment management and securities services 15,000 (50,000)Allowance made for other impairment losses 36 (14,190) (48,189)

5,052,111 4,530,549Share of results of jointly controlled entities 14 16,993 9,548Share of results of associates 13 134,038 86,620

Profit before taxation 5,203,142 4,626,717Taxation– Company and subsidiaries 38 (1,128,816) (956,830)

Net profit after taxation 4,074,326 3,669,887

Profit attributable to:Owners of the Parent 4,030,798 3,500,803Non-controlling interests 43,528 169,084

4,074,326 3,669,887

Earnings per share attributable to ordinary equity holders of the Parent (sen)– Basic 39 54.2 48.7

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CIMB GROUP HOLDINGS BERHAD

Consolidated Statements of Comprehensive Incomefor the financial year ended 31 December 2011

Note2011

RM’0002010

RM’000

Net profit after taxation 4,074,326 3,669,887

Other comprehensive income: Revaluation reserve-financial investments available-for-sale 39,348 (289,426)

– Net gain from change in fair value 287,091 421,912 – Realised gain transferred to statement of income on disposal and impairment (271,725) (716,693) – Income tax effects 22,800 18,449 – Currency translation difference 1,182 (13,094)

Net investment hedge (46,887) 253,643 Hedging reserve – cash flow hedge 226 –

– Net gain from change in fair value 226 –

Exchange fluctuation reserve 178,309 (721,438) Share of other comprehensive income of associate 25,041 –

Other comprehensive income/(expense) during the financial year, net of tax 196,037 (757,221)

Total comprehensive income for the financial year 4,270,363 2,912,666

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Company Statements of Financial Positionas at 31 December 2011

Note2011

RM’0002010

RM’000

AssetsCash and short-term funds 2 316,828 529,826Derivative financial instruments 7 17,459 5,676Loans, advances and financing 8 930 1,147Other assets 9 23,184 9,897Tax recoverable 93,288 55,383Investment in subsidiaries 12 17,887,961 16,093,491Amount owing by subsidiaries net of allowance for doubtful debts of RM775,423 (2010: RM805,285) 41 4,811 19,267Investment in associates 13 3,834 3,834Property, plant and equipment 15 31,607 32,471Investment properties 16 527 3,516

Total assets 18,380,429 16,754,508

LiabilitiesDerivative financial instruments 7 4,164 9,363Other liabilities 22 3,242 1,515Amount owing to subsidiaries 41 – 147Deferred tax liabilities 10 2,122 3,988Other borrowings 25 3,266,052 1,664,348Subordinated notes 26 2,141,655 2,130,000

Total liabilities 5,417,235 3,809,361

EquityOrdinary share capital 27 7,432,775 7,432,775Reserves 29 5,530,449 5,512,393Less: Treasury shares, at cost 30(b) (30) (21)

Total equity 12,963,194 12,945,147

Total equity and liabilities 18,380,429 16,754,508

Commitments and contingencies 7 965,000 465,000

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CIMB GROUP HOLDINGS BERHAD

Company Statements of Incomefor the financial year ended 31 December 2011

Company Statements of Comprehensive Incomefor the financial year ended 31 December 2011

Note2011

RM’0002010

RM’000

Interest income 31 8,573 29,040Interest expense 32 (235,444) (190,166)

Net interest expense (226,871) (161,126)Net non-interest income 33 2,247,140 1,728,825

2,020,269 1,567,699Overheads 34 (15,115) (15,100)

Profit before taxation 2,005,154 1,552,599Taxation 38 (500,543) (292,295)

Net profit after taxation 1,504,611 1,260,304

2011RM’000

2010RM’000

Net profit after taxation 1,504,611 1,260,304

Other comprehensive income: Hedging reserve – cash flow hedge – 12,573

– Net gain from change in fair value – 17,833 – Income tax effects – (5,260)

Other comprehensive income, net of tax – 12,573

Total comprehensive income for the financial year 1,504,611 1,272,877

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CIMB GROUP HOLDINGS BERHAD

Consolidated Statements of Changes in Equityfor the financial year ended 31 December 2011

Attributable to owners of the Parent

The Group Note

Share capital

RM’000

Share premium-

ordinary shares

RM’000

Statutory reserveRM’000

Capital reserveRM’000

Exchange fluctuation

reserveRM’000

Shares held under

trustRM’000

Treasury shares

RM’000

Revaluation reserve-financial

investments available-

for-saleRM’000

Other reservesRM’000

Share-based

payment reserveRM’000

Regulatory reserveRM’000

Retained earningsRM’000

TotalRM’000

Perpetual preference

sharesRM’000

Non-controlling

interestsRM’000

TotalRM’000

At 1 January 2011 – as previously reported 7,432,775 4,192,596 3,935,308 136,954 (347,337) (563) (21) 474,673 131,736 – 117,595 7,156,250 23,229,966 200,000 873,233 24,303,199 – Effects of adopting

Amendment to FRS 2 52(ii) – – – – – – – – – 318,071 – (318,071) – – – –

As restated 7,432,775 4,192,596 3,935,308 136,954 (347,337) (563) (21) 474,673 131,736 318,071 117,595 6,838,179 23,229,966 200,000 873,233 24,303,199

Profit for the financial year – – – – – – – – – – – 4,030,798 4,030,798 – 43,528 4,074,326 Other comprehensive income (net of tax) – – (3) – 174,664 – – 61,089 (46,254) 409 – – 189,905 – 6,132 196,037

Financial investments available-for-sale – – – – – – – 36,048 – – – – 36,048 – 3,300 39,348 Net investment hedge – – – – – – – – (46,480) – – – (46,480) – (407) (46,887) – hedging reserve –

cash flow hedge – – – – – – – – 226 – – – 226 – – 226 Currency translation difference – – (3) – 174,664 – – – – 409 – – 175,070 – 3,239 178,309Share of other comprehensive income of associate – – – – – – – 25,041 – – – – 25,041 – – 25,041

Total comprehensive income for the financial year – – (3) – 174,664 – – 61,089 (46,254) 409 – 4,030,798 4,220,703 – 49,660 4,270,363

Dividend for the financial year ended 31 December 2010 40 – – – – – – – – – – – (594,622) (594,622) – – (594,622)Dividend for the financial year ended 31 December 2011 40 – – – – – – – – – – – (891,933) (891,933) – – (891,933)

Net-controlling interest share of dividend – – – – – – – – – – – – – – (11,250) (11,250)

Transfer to statutory reserve – – 168,286 – – – – – – – – (168,286) – – – –

Transfer to regulatory reserve – – – – – – – – – – 373,032 (373,032) – – – – Arising from reorganisation of investment in subsidiaries and deemed disposal of subsidiaries – – – – – – – – – – – (15,953) (15,953) – (185,592) (201,545)Issue of share capital arising from: – Bonus issue and

capital repayment of a subsidiary – – – – – – – – – – – (1,796) (1,796) – (9,110) (10,906)

Issue of capital funds – – – 150 – – – – – – – – 150 – – 150 Rights issue of a subsidiary – – – – – – – – – – – (500) (500) – 9,749 9,249 Purchase of treasury shares 30(b) – – – – – – (9) – – – – – (9) – – (9)Share-based payment expense – – – – – – – – – 76,281 – – 76,281 – – 76,281Shares released under Equity Ownership Plan – – – – – – – – – (20,429) – – (20,429) – – (20,429)Purchase of shares in relation to Equity Ownership Plan – – – – – – – – (65,388) – – – (65,388) – – (65,388)

At 31 December 2011 7,432,775 4,192,596 4,103,591 137,104 (172,673) (563) (30) 535,762 20,094 374,332 490,627 8,822,855 25,936,470 200,000 726,690 26,863,160

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029 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Consolidated Statements of Changes in Equityfor the financial year ended 31 December 2011

Attributable to owners of the Parent

The Group Note

Share capital

RM’000

Share premium-

ordinary shares

RM’000

Statutory reserveRM’000

Capital reserveRM’000

Exchange fluctuation

reserveRM’000

Shares held under

trustRM’000

Treasury shares

RM’000

Revaluation reserve-financial

investments available-

for-saleRM’000

Other reservesRM’000

Share-based

payment reserveRM’000

Regulatory reserveRM’000

Retained earningsRM’000

TotalRM’000

Perpetual preference

sharesRM’000

Non-controlling

interestsRM’000

TotalRM’000

At 1 January 2010 – as previously reported 3,531,766 5,586,751 3,415,780 136,954 361,780 (563) – 766,500 (64,386) – – 6,265,787 20,000,369 200,000 2,079,035 22,279,404 – Effects of adopting

Amendment to FRS 2 52(ii) – – – – – – – – – 298,038 – (298,038) – – – –

As restated 3,531,766 5,586,751 3,415,780 136,954 361,780 (563) – 766,500 (64,386) 298,038 – 5,967,749 20,000,369 200,000 2,079,035 22,279,404

Profit for the financial year – – – – – – – – – – – 3,500,803 3,500,803 – 169,084 3,669,887 Other comprehensive income (net of tax) – – – – (709,117) – – (291,827) 253,752 – – – (747,192) – (10,029) (757,221)

Financial investments available-for-sale – – – – – – – (291,827) – – – – (291,827) – 2,401 (289,426)Net investment hedge – – – – – – – – 253,752 – – – 253,752 – (109) 253,643 Currency translation difference – – – – (709,117) – – – – – – – (709,117) – (12,321) (721,438)

Total comprehensive income for the financial year – – – – (709,117) – – (291,827) 253,752 – – 3,500,803 2,753,611 – 159,055 2,912,666 Dividend for the financial year ended 31 December 2009 40 – – – – – – – – – – – (653,376) (653,376) – – (653,376)

Dividends for the financial year ended 31 December 2010 – Interim dividend 40 – – – – – – – – – – – (339,083) (339,083) – – (339,083) – Special dividend 40 – – – – – – – – – – – (999,708) (999,708) – – (999,708)Non-controlling interest share of dividend – – – – – – – – – – – – – – (4,325) (4,325)Transfer to statutory reserve – – 519,528 – – – – – – – – (519,528) – – – – Transfer to regulatory reserve – – – – – – – – – – 117,595 (117,595) – – – – Issue of share capital arising from: 27– Bonus shares 3,531,764 (3,531,764) – – – – – – – – – – – – – – – Share exchange for

acquisition of a subsidiary 268,000 1,675,000 – – – – – – – – – – 1,943,000 – – 1,943,000 – Exercise of warrants 101,245 462,609 – – – – – – (57,630) – – – 506,224 – – 506,224 Arising from accretion/ dilution of equity interests in subsidiary – – – – – – – – – – – (1,083) (1,083) – (1,361,067) (1,362,150)Rights issue of a subsidiary – – – – – – – – – – – – – – 20,535 20,535 Capital repayment of subsidiary – – – – – – – – – – – – – – (20,000) (20,000)Purchase of treasury shares 30(b) – – – – – – (21) – – – – – (21) – – (21)Share-based payment expense – – – – – – – – – 20,033 – – 20,033 – – 20,033

At 31 December 2010 7,432,775 4,192,596 3,935,308 136,954 (347,337) (563) (21) 474,673 131,736 318,071 117,595 6,838,179 23,229,966 200,000 873,233 24,303,199

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030Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Company Statements of Changes in Equityfor the financial year ended 31 December 2011

Non-distributable Distributable

The Company Note

Share capital

RM’000

Share premium

RM’000

Capital redemption

reserveRM’000

Treasury shares

RM’000

Other reserveRM’000

Hedging reserveRM’000

Retained earningsRM’000

TotalRM’000

At 1 January 2011 7,432,775 4,192,596 55,982 (21) – – 1,263,815 12,945,147

Profit for the financial year – – – – – – 1,504,611 1,504,611

Total comprehensive income for the financial year – – – – – – 1,504,611 1,504,611Dividends for the financial year ended 31 December 2010 40 – – – – – – (594,622) (594,622)Dividends for the financial year ended 31 December 2011 40 – – – – – – (891,933) (891,933)Purchase of treasury shares 30(b) – – – (9) – – – (9)

At 31 December 2011 7,432,775 4,192,596 55,982 (30) – – 1,281,871 12,963,194

At 1 January 2010 3,531,766 5,586,751 55,982 – 57,630 (12,573) 1,995,678 11,215,234Profit for the financial year – – – – – – 1,260,304 1,260,304Other comprehensive income (net of tax) – – – – – 12,573 – 12,573

Hedging reserve – cash flow hedge – – – – – 12,573 – 12,573

Total comprehensive income for the financial year – – – – – 12,573 1,260,304 1,272,877Dividend for the financial year ended 31 December 2009 40 – – – – – – (653,376) (653,376)Dividends for the financal year ended 31 December 2010 – Interim dividend 40 – – – – – – (339,083) (339,083) – Special dividend 40 – – – – – – (999,708) (999,708)Issue of share capital arising from: 27 – exercise of warrants 101,245 462,609 – – (57,630) – – 506,224 – bonus shares 3,531,764 (3,531,764) – – – – – – – share exchange of acquisition

of a subsidiary 268,000 1,675,000 – – – – – 1,943,000Purchase of treasury shares 30(b) – – – (21) – – – (21)

At 31 December 2010 7,432,775 4,192,596 55,982 (21) – – 1,263,815 12,945,147

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CIMB GROUP HOLDINGS BERHAD

Consolidated Statements of Cash Flowsfor the financial year ended 31 December 2011

2011RM’000

2010RM’000

Operating ActivitiesProfit before taxation 5,203,142 4,626,717Adjustments for:Depreciation of property, plant and equipment 332,205 345,395Amortisation of prepaid lease payments 14,910 60,483Gain on disposal of property, plant and equipment/assets held for sale (16,194) (170,669)Gain on disposal of leased assets (99) (511)Property, plant and equipment written off – 200Unrealised gain on foreign exchange (312,741) (600,917)Dividends from financial investments available-for-sale (40,780) (42,408)Dividends from financial investments held-to-maturity – (77)Allowance for losses on loans, advances and financing 900,815 1,004,159Gain on sale of financial investments available-for-sale (329,432) (707,041)(Gain)/loss on sale of financial assets held for trading and derivative financial instruments (222,902) 96,918Net loss arising from hedging derivatives 16,284 60,234Gain on maturity of financial investments held-to-maturity (76,864) (104,278)Allowance for impairment losses 14,190 48,189Accretion of discounts less amortisation of premiums (168,068) (192,662)Impairment of property, plant and equipment – 824Amortisation of intangible assets 242,179 271,508Revaluation of financial investments available-for-sale 9,666 (17,958)Gain on revaluation of investment properties (1,842) (8,632)Gain on deemed disposal/disposal of net assets and interest in subsidiaries (250,000) (27,218)Loss on disposal of foreclosed properties 19,942 –Share of results of associates (134,038) (86,620)Unrealised loss on revaluation of financial assets held for trading 36,621 32,876Unrealised (gain)/loss on revaluation of derivative financial instruments (349,416) 21,194Allowance for other receivables 8,908 8,085Allowance (written back)/made for commitments and contingencies (55,435) 20,900(Recoveries)/losses from investment management and securities services (15,000) 50,000Loss from fair value hedge of Redeemable Preference Shares (“RPS”) 9,313 99,331MES expenses 23,718 20,033Share-based payment expense 52,563 –Share of results of jointly controlled entities (16,993) (9,548)

(308,490) 171,790

4,894,652 4,798,507(Increase)/decrease in operating assetsReverse repurchase agreements (425,820) 740,211Deposits and placements with banks and other financial institutions 7,571,811 (9,382,663)Financial assets held for trading 3,064,657 (2,043,979)Loans, advances and financing (25,640,381) (20,516,040)Other assets 720,506 698,446Derivative financial instruments 643,509 105,296Statutory deposits with central banks (3,673,669) (566,679)

(17,739,387) (30,965,408)Increase/(decrease) in operating liabilitiesDeposits from customers 22,087,478 20,963,328Deposits and placements of banks and other financial institutions (127,848) 2,960,575Repurchase agreements 1,034,859 (532,010)Amount due to Cagamas Berhad (107,523) (228,089)Bills and acceptances payable 3,034,245 336,572Other liabilities (1,781,858) 352,816

24,139,353 23,853,192

Cash flows generated from/(used in) operations 11,294,618 (2,313,709)

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CIMB GROUP HOLDINGS BERHAD

Consolidated Statements of Cash Flowsfor the financial year ended 31 December 2011

Note2011

RM’0002010

RM’000

Taxation paid (927,431) (703,134)

Net cash flows generated from/(used in) operating activities 10,367,187 (3,016,843)

Investing ActivitiesProceeds from disposal of property, plant and equipment 79,650 611,932Proceeds from disposal of prepaid lease payments – 4,828Dividends received from financial investments available-for-sale 40,780 42,408Dividends received from financial investments held-to-maturity – 77Net (purchase)/proceeds of financial investments available-for-sale (1,733,637) 46,502Net (purchase)/proceeds of financial investments held-to-maturity (2,551,865) 443,704Net cash inflow from acquisitions and disposals of subsidiaries 640 235,255Purchase of property, plant and equipment (454,291) (348,392)Disposal of intangible assets 1,903 18,295Purchase of intangible assets (308,056) (168,250)

Net cash flows (used in)/generated from investing activities (4,924,876) 886,359

Financing ActivitiesDividends paid to shareholders (1,497,805) (1,996,492)Redemption of bonds (423,982) –Exercise of warrants – 506,224Net proceeds from Subordinated Notes 2,128,242 3,332,602Proceeds from bonds 521,225 –Redemption of USD200 million Subordinated Notes (635,200) –Proceeds/(repayments) from term loan facility 1,000,658 (92,838)(Repayments)/proceeds from revolving credit and overdraft (63,018) 523,158Net repayment of commercial papers and medium term notes 604,264 –Purchase of treasury shares (9) (21)Repayment of redeemable preference shares (13,696) –Net repayment of USD100 million syndicated term loan – (34,150)

Net cash flows generated from financing activities 1,620,679 2,238,483

Net increase in cash and short-term funds during the financial year 7,062,990 107,999Effects of exchange rate changes 420,595 (1,197,426)Cash and short-term funds at beginning of the financial year 27,185,260 28,274,687

Cash and short-term funds at end of the financial year 2 34,668,845 27,185,260Statutory deposits with Bank Indonesia* (3,887,585) (2,985,829)Monies held in trust (384,083) (329,070)

Cash and cash equivalents at end of the financial year 30,397,177 23,870,361

* This represent non-interest bearing statutory deposits of a foreign subsidiary maintained with Bank Indonesia in compliance with their applicable legislation of RM3,887,585,000 (2010: RM2,985,829,000), which is not readily available for use by the Group.

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Company Statements of Cash Flowsfor the financial year ended 31 December 2011

2011RM’000

2010RM’000

Operating ActivitiesProfit before taxation 2,005,154 1,552,599Adjustments for:Depreciation of property, plant and equipment 2,365 2,136Depreciation of investment properties 110 125Impairment of investment properties – 824Written off of property, plant and equipment 68 –Gain on disposal of investment properties (1,670) –Loss on disposal of property, plant and equipment/asset held for sale – 171Unrealised loss/(gain) on foreign exchange 9,073 (6,565)Unrealised (gain)/loss on revaluation of derivative financial instruments (18,386) 13,264Net loss arising from hedging derivatives 194 –Dividends from subsidiaries (2,240,314) (1,741,815)Dividend from an associate (700) (1,534)Interest expense on commercial papers 8,762 2,618Accretion of discounts less amortisation of premiums (583) (3,200)

(2,241,081) (1,733,976)

(235,927) (181,377)(Increase)/decrease in operating assetsLoans, advances and financing 217 344Other assets (12,299) (7,052)

(12,082) (6,708)(Decrease)/increase in operating liabilitiesOther liabilities 7,280 (629,307)

7,280 (629,307)

Cash flows used in operations (240,729) (817,392)Net taxation refund 17,440 76,071

Net cash flows used in operating activities (223,289) (741,321)

Investing ActivitiesProceeds from disposal of property, plant and equipment – 446Proceeds from disposal of investment properties 4,550 –Purchase of property, plant and equipment (2,204) (2,298)(Advances to)/repayment from subsidiaries 14,456 (851)Dividends from subsidiaries 1,682,735 1,400,756Dividend from an associate 525 1,150Acquisition of additional interest in subsidiary (1,794,470) –

Net cash flows generated from investing activities (94,408) 1,399,203

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034Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Company Statements of Cash Flowsfor the financial year ended 31 December 2011

Note2011

RM’0002010

RM’000

Financing ActivitiesDividends paid to shareholders (1,486,555) (1,992,167)Proceeds from syndicated term loan – 315,000Repayment of syndicated term loan – (342,500)Proceeds from term loan facility 1,000,000 –Proceeds from issuance of subordinated notes – 750,000Proceeds from commercial papers and medium term notes 1,490,995 347,382Purchase of treasury shares (9) (21)Repayment of commercial papers and medium term notes (900,000) (350,000)Exercise of warrants – 506,224

Net cash flows used in financing activities 104,431 (766,082)

Net (decrease)/increase in cash and cash equivalents during the financial year (213,266) (108,200)Effects of exchange rate changes 268 85Cash and cash equivalents at beginning of the financial year 529,826 637,941

Cash and cash equivalents at end of the financial year 2 316,828 529,826

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035 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

The following accounting policies have been used consistently in dealing with items that are considered material in relation to the Financial Statements.

A BASIS OF PREPARATION

The Financial Statements of the Group and the Company have been prepared in accordance with the Financial Reporting Standards, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia (“BNM”) Guidelines, Shariah requirements and the provisions of the Companies Act, 1965.

The Financial Statements have been prepared under historical cost convention, as modified by the revaluation financial investments available-for-sale, financial assets and financial liabilities (including derivatives financial instruments) at fair value through profit or loss.

The Financial Statements incorporate those activities relating to Islamic banking which have been undertaken by the Group. Islamic banking refers generally to the acceptance of deposits, granting of financing and dealing in Islamic Securities under the Shariah principles.

The preparation of Financial Statements in conformity with Financial Reporting Standards requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of income and expenses during the reported period. It also requires the Directors to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge of current events and actions, actual results may differ from those estimates.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 50.

(a) Standards, amendments to published standards and interpretations that are effective and applicable to the Group and the Company The new accounting standards, amendments to published standards and interpretations that are effective for the Group and the Company for the

financial year beginning 1 January 2011 are as follows:

• Revised FRS 1 “First-time Adoption of Financial Reporting Standards”

• Revised FRS 3 “Business Combination”

• Revised FRS 127 “Consolidated and Separate Financial Statements”

• Amendment to FRS 2 “Share-based Payment – GroupCash-settled Share-based Payment Transactions”

• Amendment to FRS 7 “Financial instruments: Disclosures-Improving Disclosures about Financial Instruments”

• Amendment to FRS 1 “First-time Adoption of Financial Reporting Standards”

• Amendments to FRS 132 “Financial instruments: Presentation-Classification of Rights Issue”

• IC Interpretation 4 “DeterminingWhether an Arrangement contains a Lease”

• IC Interpretation 16 “Hedges of a Net Investment in a ForeignOperation”

• IC Interpretation 17 “Distributions of Non-cash Assets to Owners”

• IC Interpretation 18 “Transfer of Assets fromCustomers”

• TR i-4 “Shariah Compliant Sale Contract”

• Improvements to FRSs (2010)

A summary of the impact of new accounting standards, amendments and improvements to published standards and interpretations on the financial statements of the Group and the Company is set out in Note 52.

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Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

A BASIS OF PREPARATION (CONTINUED)

(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Company but not yet effective

In November 2011, the Malaysian Accounting Standards Board formally announced that Malaysian reporting entities would be required to comply with the new IFRS-compliant framework, Malaysian Financial Reporting Standards (MFRS) for financial years commencing on or after 1 January 2012. MFRS 1 “First-time adoption of MFRS” provides for certain optional exemptions and certain mandatory exceptions for first-time MFRS adopters.

The Group will be required to adopt the new standards, amendments to standards and interpretations in the period set out below and comparative financial information prepared in compliance with MFRS will be required for the year commencing 1 January 2010:

(i) Financial year beginning on/after 1 January 2012

• MFRS139“Financial instruments: recognitionandmeasurement” -BankNegaraMalaysiahas removed the transitionalprovision forbankinginstitutions on loan impairment assessment and provisioning to comply with the MFRS 139 requirements.

• The revisedMFRS124“Relatedpartydisclosures” (effective from1January2012) removes theexemption todisclose transactionsbetweengovernment-related entities and the government, and all other government-related entities. The following new disclosures are now required for government related entities:

– The name of the government and the nature of their relationship;– The nature and amount of each individually significant transactions; and– The extent of any collectively significant transactions, qualitatively or quantitatively.

• Amendment to MFRS 112 “Income taxes” (effective from 1 January 2012) introduces an exception to the existing principle for themeasurement of deferred tax assets or liabilities arising on investment property measured at fair value. MFRS 112 currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in MFRS 140 “Investment property”. As a result of the amendments, IC Interpretation 121 “Income taxes - recovery of revalued non-depreciable assets” will no longer apply to investment properties carried at fair value. The amendments also incorporate into MFRS 112 the remaining guidance previously contained in IC Interpretation 121 which is withdrawn.

• IC Interpretation19“Extinguishing financial liabilitieswithequity instruments” (effective from1July2011)providesclarificationwhenanentityrenegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares or other equity instruments to settle the financial liability fully or partially. A gain or loss, being the difference between the carrying value of the financial liability and the fair value of the equity instruments issued, shall be recognised in profit or loss. Entities are no longer permitted to reclassify the carrying value of the existing financial liability into equity with no gain or loss recognised in profit or loss.

• Amendmentsto IC Interpretation14“MFRS119-The limitonadefinedbenefitassets,minimumfundingrequirementsandtheir interaction”(effective from 1 July 2011) permits an entity to recognise the prepayments of contributions as an asset, rather than an expense in circumstances when the entity is subject to a minimum funding requirement and makes an early payment of contributions to meet those requirements.

• Amendment to MFRS 101 “Presentation of items of other comprehensive income” (effective from 1 January 2012) requires entities toseparate items presented in ‘other comprehensive income’ (OCI) in the statement of comprehensive income into two groups, based on whether or not they may be recycled to profit or loss in the future. The amendments do not address which items are presented in OCI.

• Amendment to MFRS 1 “First time adoption on fixed dates and hyperinflation” (effective from 1 January 2012) includes two changes toMFRS 1. The first replaces references to a fixed date of 1 January 2004 with ‘the date if transition to MFRSs’, thus eliminating the need for entities adopting MFRSs for the first time to restate de-recognition transactions that occurred before the date of transition to MFRSs. The second amendment provides guidance on how an entity should resume presenting financial statements in accordance with MFRSs after a period when the entity was unable to comply with MFRSs because its functional currency was subject to severe hyperinflation.

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037 Annual Report 2011Financial Statements

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Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

A BASIS OF PREPARATION (CONTINUED)

(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Company but not yet effective (Continued)(i) Financial year beginning on/after 1 January 2012 (continued)

• Amendments to MFRS 7 “Financial instruments: Disclosures on transfers of financial assets” (effective from 1 January 2012) promotestransparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position, particularly those living securitisation of financial assets.

The adoption of the new standards, amendments to published standards and interpretations are not expected to have a material impact on the financial effect of the Group and the Company.

(ii) Financial year beginning on/after 1 January 2013

• MFRS 9 “Financial instruments - classification andmeasurement of financial assets and financial liabilities” (effective from 1 January 2015)replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification categories: amortised cost and fair value. The basis of classification depends on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

The accounting and presentation for financial liabilities and for de-recognising financial instruments has been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liability’s credit risk directly in other comprehensive income (OCI). There is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated gains or losses may be transferred within equity.

The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.

• MFRS 10 “Consolidated financial statements” (effective from 1 January 2013) changes the definition of control. An investor controls aninvestee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. It replaces all the guidance on control and consolidation in MFRS 127 “Consolidated and separate financial statements” and IC Interpretation 112 “Consolidation – special purpose entities”.

• MFRS 11 “Joint arrangements” (effective from 1 January 2013) requires a party to a joint arrangement to determine the type of jointarrangement in which it is involved by assessing its rights and obligations arising from the arrangement, rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed.

• MFRS 12 “Disclosures of interests in other entities” (effective from 1 January 2013) sets out the required disclosures for entities reportingunder the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found in MFRS 128 “Investments in associates”. It requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities.

• MFRS 13 “Fair value measurement” (effective from 1 January 2013) aims to improve consistency and reduce complexity by providing aprecise definition of fair value and a single source of fair value measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7 “Financial instruments: Disclosures”, but apply to all assets and liabilities measured at fair value, not just financial ones.

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038Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

A BASIS OF PREPARATION (CONTINUED)

(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Company but not yet effective (Continued)(ii) Financial year beginning on/after 1 January 2013 (continued)

• The revised MFRS 127 “Separate financial statements” (effective from 1 January 2013) includes the provisions on separate financialstatements that are left after the control provisions of MFRS 127 have been included in the new MFRS 10.

• The revised MFRS 128 “Investments in associates and joint ventures” (effective from 1 January 2013) includes the requirements for jointventures, as well as associates, to be equity accounted following the issue of MFRS 11.

• Amendment to MFRS 119 “Employee benefits” (effective from 1 January 2013) makes significant changes to the recognition andmeasurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach. MFRS 119 shall be withdrawn on application of this amendment.

The Group has not finalised the financial impact of the change to MFRS and is expected to complete the process by the 2012 first quarter announcement.

B ECONOMIC ENTITIES IN THE GROUP

(a) Subsidiaries The Company treats as subsidiaries, those corporations, partnerships or other entities (including special purpose entities) in which the Company has

the power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity.

Even if there is no shareholder relationship, special purpose entities (“SPEs”) are consolidated in accordance with IC Interpretation 112 (“Consolidation: Special Purpose Entities”), if the Group controls them from an economic perspective.

When assessing whether the Group controls a SPE, in addition to the criteria in FRS 127, it evaluates a range of factors, including whether:

(a) the activities of the SPE are being conducted on the Group’s behalf according to its specific business needs so that the Group obtains the benefits from the SPE’s operations;

(b) the Group has the decision-making power to obtain the majority of the benefits of the activities of the SPE, or the Group has delegated these decision-making power by setting up an ‘autopilot’ mechanism, or

(c) the Group has the rights to obtain the majority of the benefits of the activities of the SPE and therefore may be exposed to risks incident to the activities of the SPE; or

(d) the Group retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain the benefits from its activities.

The consolidated Financial Statements include the Financial Statements of the Company and all its subsidiaries made up to the end of the financial year.

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039 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(a) Subsidiaries (Continued) Subsidiaries are fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that control

ceases.

The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired except for certain business combinations which were accounted for using the predecessor basis of accounting as follows:

• subsidiaries thatwere consolidated prior to 1 April 2002 in accordancewithMalaysianAccountingStandard 2 “Accounting for Acquisitions andMergers”, the generally accepted accounting principles prevailing at that time,

• businesscombinationsconsolidatedon/after1April2002butwithagreementdatesbefore1January2006 thatmeet theconditionsofamergeras set out in MASB 21 “Business Combinations”,

• internal group reorganisations, as defined in MASB 21, consolidated on/after 1 April 2002 but with agreement dates before 1 January 2006where:

– the ultimate shareholders remain the same, and the rights of each such shareholder, relative to the others, are unchanged; and

– the minorities’ share of net assets of the Group is not altered by the transfer

• combinations involving entities or businesses under common control with agreement dates on/after 1 January 2006

The Group has taken advantage of the transitional provision provided by MASB 21, FRS 3 and FRS 3 (revised) to apply these Standards prospectively. Accordingly, business combinations entered into prior to the respective effective dates have not been restated to comply with these Standards.

Under the acquisition method of accounting, the consideration transferred for an acquisition is measured as the acquisition date fair value of the assets transferred, the liabilities incurred and the equity interest issued. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed in the business combination are measured initially at their fair value on the date of acquisition.

In business combination achieved in stages, previously held equity interest in acquire are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in statement of income.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in acquiree (if any), and the fair value of the Group’s previously held equity interest in acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in note L. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in statement of income on the acquisition date.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. On an acquisition-by-acquisition basis, the Group measures any non-controlling interest in the acquire either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. At the end of reporting period, non-controlling interest consists of amount calculated on the date of combinations and its share of changes in the subsidiary’s equity since the date of combination.

All earnings and losses of the subsidiary are attributed to the parent and the non-controlling interest, even if the attribution of losses to the non-controlling interest results in a debit balance in the shareholders’ equity. Profit or loss attribution to non-controlling interests for prior years is not restated.

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040Annual Report 2011Financial Statements

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Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(a) Subsidiaries (Continued) Under the predecessor basis of accounting, the results of subsidiaries are presented as if the business combination had been effected throughout

the current and previous years. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the business combination is cancelled with the values of the shares received. Any resulting credit difference is classified as equity. Any resulting debit difference is adjusted against merger reserves. Any share premium, capital redemption reserve and any other reserves which are attributable to share capital of the combined entities, to the extent that they have not been capitalised by a debit difference, are reclassified and presented as movement in other capital reserves.

All material transactions and balances between group companies are eliminated and the consolidated Financial Statements reflect external transactions only. Where necessary, the accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets as at the date of disposal including the cumulative amount of any exchange differences that related to the subsidiary required in statement of income attributable to the parent.

Change in accounting policy

The Group changed its accounting policy on business combinations and accounting for non-controlling interest when it adopted the revised FRS 3 “Business Combinations” and revised FRS 127 “Consolidated and Separate Financial Statements”.

Previously, contingent consideration in a business combination was recognised when it is probable that payment will be made. Acquisition-related costs were included as part of the cost of business combination. Any non-controlling interest in the acquire was measure at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Any adjustments to the fair values of the subsidiary’s identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group was accounted for as a revaluation.

The Group has applied the new policies prospectively to transactions occurring on or after 1 January 2011. As a consequence, no adjustments were necessary to any of the amounts previously recognised in the financial statements.

Previously, the Group had stopped attributing losses to the non-controlling interest because the losses exceeded the carrying amount of the non-controlling interest. The Group has applied this policy prospectively. On the date of adoption of the new policy, the non-controlling interest reflects its previous carrying amount (that is, zero).

(b) Transaction with non-controlling interests The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Group. For purchases

from non-controlling interests, the difference between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. For disposals to non-controlling interests, differences between any proceeds received and the relevant share of non-controlling interest are also recognised in equity. The Group has applied this policy prospectively to transactions occurring on or after 1 January 2011.

Change in accounting policy

Previously, the Group applied a policy of treating transactions with non-controlling interest as transactions with parties external to the Group. Accordingly, disposals resulted in gains or losses to the statement of income and purchases resulted in the recognition of goodwill, being the difference between consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired.

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041 Annual Report 2011Financial Statements

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Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(c) Jointly controlled entities The Group treats as a jointly controlled entity, corporations, partnerships or other entities over which there is contractually agreed sharing of control

by the Group with one or more parties where the strategic financial and operating decisions relating to the entities require unanimous consent of the parties sharing control.

The Group’s interest in jointly controlled entities is accounted for in the consolidated Financial Statements by the equity method of accounting.

Equity accounting involves recognising the Group’s share of the post acquisition results of the jointly controlled entities in the statements of comprehensive income and its share of post acquisition movements within reserves in reserves. The cumulative post acquisition movements are adjusted against the cost of the investment and include goodwill on acquisition, net of accumulated impairment loss (if any).

(d) Associates The Group treats as associates, corporations, partnerships or other entities in which the Group exercises significant influence, but which it does not

control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Investments in associates are accounted for in the consolidated Financial Statements by the equity method of accounting.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the statement of incomes, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The interest in an associate is the carrying amount of the investment in the associate under the equity method together with any long-term interests that, in substance, form part of the Group’s net investment in the associate. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent that the investor has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred.

(e) Changes in ownership interest When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is re-measured to its fair value with

the change in carrying amount recognised in statement of income. This fair value is its fair value on initial recognition as a financial asset in accordance with FRS 139. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.

Change in accounting policy

The Group has changed its accounting policy prospectively for transactions occurring on or after 1 January 2011 with non-controlling interests and transactions involving the loss of control, joint control or significant influence when it early adopted the revised FRS 127 “Consolidated and Separate Financial Statements”. The revisions to FRS 127 contained consequential amendments to FRS 128 “Investment in Associates” and FRS 131 “Interests in Joint Ventures”.

Previously when the Group ceased to have control, joint control or significant influence over an entity, the carrying amount of the investment at the date control, joint control or significant influence ceased became its cost on initial measurement as a financial asset in accordance with FRS 139.

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B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(f) Interests in subsidiaries, jointly controlled entities and associates In the Company’s separate financial statements, investments in subsidiaries, jointly controlled entities and associates are carried at cost less

accumulated impairment losses. On disposal of investments in subsidiaries, jointly controlled entities and associates, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

C RECOGNITION OF INTEREST/PROFIT INCOME AND INTEREST/PROFIT ExPENSE

Interest income and expense for all interest-bearing financial instruments are recognised within “interest income” and “interest expense” in the statement of income using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instruments or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group takes into account all contractual terms of the financial instrument and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective interest rate, but not future credit losses.

Interest on impaired financial assets is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Income from Islamic banking business is recognised on an accrual basis in accordance with the principles of Shariah.

D RECOGNITION OF FEES AND OTHER INCOME

Fees and commissions are recognised as income when all conditions precedent are fulfilled. Commitment fees for loans, advances and financing that are likely to be drawn down are deferred (together with related direct costs) and income which forms an integral part of the effective interest rate of a financial instrument is recognised as an adjustment to the effective interest rate on the financial instrument.

Guarantee fees, portfolio management fees and income from asset management and securities services which are material are recognised as income based on a time apportionment method.

Brokerage fees are recognised as income based on inception of such transactions.

Fees from advisory and corporate finance activities are recognised as income on completion of each stage of the engagement.

Dividends are recognised when the right to receive payment is established.

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Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

E FINANCIAL ASSETS

(a) Classification The Group and the Company allocate their financial assets into the following categories: financial assets at fair value through profit or loss, loans

and receivables, financial investments held-to-maturity and financial investments available-for-sale. Management determines the classification of its financial instruments at initial recognition.

(i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss comprise of financial assets held for trading and other financial assets designated by the

Group and the Company as fair value through profit or loss upon initial recognition.

A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held for trading unless they are designated and effective as hedging instruments.

(ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

(iii) Financial investments held-to-maturity Financial investments held-to-maturity are non-derivative instruments with fixed or determinable payments and fixed maturities that the Group’s

and the Company’s management has the positive intent and ability to hold to maturity. If the Group or the Company sells other than an insignificant amount of financial investments held-to-maturity, the entire category will be tainted and reclassified as financial investments available-for-sale.

(iv) Financial investments available-for-sale Financial investments available-for-sale are those intended to be held for an indefinite period of time, which may be sold in response to needs

for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as financial assets at fair value through profit or loss, loans and receivables and financial investments held-to-maturity.

(b) Recognition and initial measurement Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

Transaction costs for securities carried at fair value through profit or loss are taken directly to the statement of income.

(c) Subsequent measurement Financial assets at fair value through profit or loss and financial investments available-for-sale are subsequently carried at fair value, except for

investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured in which case the investments are stated at cost. Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are included in the statement of income in the period which they arise. Gains and losses arising from changes in fair value of financial investments available-for-sale are recognised directly in other comprehensive income until the securities are derecognised or impaired at which time the cumulative gains or loss previously recognised in equity are recognised directly in the other comprehensive income. Foreign exchange gains or losses of financial investments available-for-sale are recognised in the statement of income in the period it arises.

Financial investments held-to-maturity are subsequently measured at amortised cost using the effective interest method. Gains or losses arising from the de-recognition or impairment of the securities are recognised in the statement of income.

Interest from financial assets held at fair value through profit or loss, financial investments available-for-sale and financial investments held-to-maturity is calculated using the effective interest method and is recognised in the profit or loss. Dividends from available-for-sale equity instruments are recognised in the statement of income when the entity’s right to receive payment is established.

Loans and receivables are initially recognised at fair value – which is the cash consideration to originate or purchase the loan including the transaction costs, and measured subsequently at amortised cost using the effective interest rate method. Interest on loans is included in the statement of income. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the loan and recognised in the statement of income.

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E FINANCIAL ASSETS (CONTINUED)

(d) Reclassification of financial assets The Group and the Company may choose to reclassify a non-derivative financial assets held for trading out of the held for trading category if the

financial asset is no longer held for the purposes of selling in the near term. In addition, the Group and the Company may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale categories if the Group and the Company have the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at the fair value at the date of the reclassification. The fair values of the securities become the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before the reclassification date are subsequently made. The effective interest rates for the securities reclassified to held-to-maturity category are determined at the reclassification date. Further changes in estimates of future cash flows are recognised as an adjustment to the effective interest rates.

F FINANCIAL LIABILITIES

Financial liabilities are measured at amortised cost, except for trading liabilities and liabilities designated at fair value, which are held at fair value through profit or loss. Financial liabilities are initially recognised at fair value plus transaction costs for all financial liabilities not carried at fair value through profit or loss. Financial liabilities at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in statement of income. Financial liabilities are derecognised when extinguished.

(a) Financial liabilities at fair value through profit or loss This category comprises two sub-categories: financial liabilities classified as held for trading, and financial liabilities designated at fair value through

profit or loss upon initial recognition.

A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held for trading unless they are designated and effective as hedging instruments. The specific Group and Company accounting policy on derivatives is detailed in Note P.

The financial liabilities measured at fair value through profit and loss upon initial recognition are trading derivatives.

(b) Financial liabilities at amortised cost Financial liabilities that are not classified as fair value through profit or loss fall into this category and are measured at amortised cost. The financial

liabilities measured at amortised cost are deposits from customers, deposits and placement of banks and other financial institutions, repurchase agreements, bills and acceptances payable, sundry creditors, bonds, other borrowings, subordinated notes and redeemable preference shares.

G DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial assets are derecognised when the contractual rights to receive the cash flows from these assets have ceased to exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets are also transferred (that is, if substantially all the risks and rewards have not been transferred, the Group tests control to ensure that continuing involvement on the basis of any retained powers of control does not prevent derecognition). Financial liabilities are derecognised when they have been redeemed or otherwise extinguished.

Collateral furnished by the Group under standard repurchase agreements transactions is not derecognised because the Group retains substantially all the risks and rewards on the basis of the predetermined repurchase price, and the criteria for derecognition are therefore not met.

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H IMPAIRMENT OF FINANCIAL ASSETS

(a) Assets carried at amortised cost A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one

or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

The criterias the Group and the Company use to determine that there is objective evidence of impairment loss include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, default of delinquency in interest or principal payments and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The Group and the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial assets’ original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of income. If a loan or financial investments held-to-maturity have a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

Financial assets that have not been individually assessed are grouped together for portfolio impairment assessment. These financial assets are grouped according to their credit risk characteristics for the purposes of calculating an estimated collective loss. These characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being assessed. Future cash flows on a group of financial assets that are collectively assessed for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group.

The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group and the Company to reduce any differences between loss estimates and actual loss experience.

When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after taking into consideration the realisable value of collateral, if any, when in the judgement of the management, there is no prospect of recovery.

If, in a subsequent period, the amount of impairment losses decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the statement of income.

The Group is currently reporting under BNM’s transitional arrangement as prescribed in the guideline on “Classification and Impairment Provisions for Loans or Financing” issued on 8 June 2011. However, the Group’s financial statements are prepared in full compliance under FRS 139 principles.

(b) Assets classified as available-for-sale The Group and the Company assess at each date of the statements of financial position whether there is objective evidence that the financial asset

is impaired.

For debt securities, the Group and the Company use criteria and measurement of impairment loss applicable for “assets carried at amortised cost” above. If in a subsequent period, the fair value of a debt instrument classified as financial investments available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in statement of income, the impairment loss is reversed through statement of income.

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H IMPAIRMENT OF FINANCIAL ASSETS (CONTINUED)

(b) Assets classified as available-for-sale (Continued) In the case of equity instruments classified as financial investments available-for-sale in addition to the criteria for “assets carried at amortised cost”

above, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If there is objective evidence that an impairment loss on financial investments available-for-sale has been incurred, the cumulative loss that has been recognised directly in equity is removed from other comprehensive income and recognised in the statement of income. The amount of cumulative loss that is reclassified to the statement of income is the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in statement of income. Impairment losses recognised in statement of income on equity instruments are not reversed through the statement of income.

I SALE AND REPURCHASE AGREEMENTS

Securities purchased under resale agreements (“reverse repurchase agreements”) are securities which the Group had purchased with a commitment to re-sell at future dates. The commitment to re-sell the securities is reflected as an asset on the statements of financial position.

Conversely, obligations on securities sold under repurchase agreements (“repurchase agreements”) are securities which the Group had sold from its portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligation to repurchase the securities are reflected as a liability on the statements of financial position.

The difference between sale and repurchase price as well as purchase and resale price is treated as interest and accrued over the life of the resale/repurchase agreement using the effective yield method.

J PROPERTY, PLANT AND EqUIPMENT

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are charged to the statement of income during the financial period in which they are incurred.

Freehold land and capital work-in-progress are not depreciated. Other property, plant and equipment are depreciated on a straight line basis to write off the cost of the assets to their residual values over their estimated useful lives, summarised as follows:

Buildings on freehold land 50 years

Buildings on leasehold land 50 years or more 50 years or over the remaining period of the lease, whichever is shorter

Leasehold land 50 years or over the remaining period of the lease, whichever is shorter

Buildings on leasehold land less than 50 years 40 years or over the remaining period of the lease, whichever is shorter

Office equipment, furniture and fixtures – office equipment 5 years – furniture and fixtures 10 years

Renovations to rented premises 5 years or over the period of the tenancy, whichever is shorter

Computer equipment and software – servers and hardware 3-5 years – ATM machine 10 years

Computer equipment and software under lease 3 years or over the period of the lease, whichever is shorter

Motor vehicles 5 years

General plant and machinery 8 years

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J PROPERTY, PLANT AND EqUIPMENT (CONTINUED)

Depreciation on capital work-in-progress commences when the assets are ready for their intended use.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment are reviewed for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amounts and are included in non-interest income.

k INVESTMENT PROPERTIES

Investment properties, comprising principally land and office buildings, are held for long term rental yields or for capital appreciation or both, and are not occupied by the Group and the Company.

Investment properties of the Company are stated at cost less accumulated depreciation and accumulated impairment loss. At the Group level, investment properties of the Company are classified as property, plant and equipment as the properties are rented out to an entity within the Group.

Investment properties of the Group are stated at fair value, representing the open-market value determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Changes in fair values are recorded in the statements of income as part of other income.

On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal, it shall be derecognised (eliminated from the statements of financial position). The difference between the net disposal proceeds and the carrying amount is recognised in statement of income in the period of the retirement or disposal.

L INTANGIBLE ASSETS

(a) Goodwill Goodwill arising from business combination represents the excess of the cost of acquisition and the fair value of the Group’s share of the net of

identifiable assets of the acquired subsidiary. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units (“CGU”) for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which goodwill arose, identified according to operating segment.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Impairment testing is performed annually by comparing the present value of the CGU’s projected cash flows against the carrying amount of its net assets which include the allocated goodwill.

Goodwill on acquisitions of associates and jointly controlled entities respectively are included in investments in associates and jointly controlled entities. Such goodwill is tested for impairment as part of the overall balance.

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L INTANGIBLE ASSETS (CONTINUED)

(b) Other intangible assets Other intangible assets are measured at fair value. Other intangible assets include customer relationships, core deposits and computer software.

Other intangible assets are initially recognised when they are separable or arise from contractual or other legal rights, the cost can be measured reliably and, in the case of intangible assets not acquired in a business combination, where it is probable that future economic benefits attributable to the assets will flow from their use. The value of intangible assets which are acquired in a business combination is generally determined using fair value at acquisition. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Intangible assets that have an indefinite useful life, or are not yet ready for use, are tested for impairment annually. This impairment test may be performed at any time during the year, provided it is performed at the same time every year. An intangible asset recognised during the current period is tested before the end of the current year.

Intangible assets that have a finite useful life are stated at cost less accumulated amortisation and accumulated impairment losses, and are amortised over their estimated useful lives.

Intangible assets are amortised over their finite useful lives as follows:

Customer relationships: – credit card 12 years – revolving credit 4 – 5 years – overdraft 6 – 7 years – trade finance 5 years

Core deposits 8 – 20 years

Computer software 3 – 15 years

M ASSETS PURCHASED UNDER LEASE

(a) Finance lease Assets purchased under lease which in substance transfers the risks and benefits of ownership of the assets to the Group or the Company are

capitalised under property, plant and equipment. The assets and the corresponding lease obligations are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased assets at the beginning of the lease term. Such leased assets are subject to depreciation on the same basis as other property, plant and equipment.

Leases which do not meet such criteria are classified as operating lease and the related rentals are charged to statement of income.

(b) Operating lease Leasehold land Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated

as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted as prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided.

Others Leases of assets under which all the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments made

under operating leases are charged to the statements of income on a straight line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

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N ASSETS SOLD UNDER LEASE

(a) Finance lease When assets are sold under a finance lease, the present value of the lease payments is recognised as a debtor. The difference between the gross

debtor and the present value of the debtor is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return.

(b) Operating lease Assets leased out under operating leases are included in property, plant and equipment in the statements of financial position. They are depreciated

over their expected useful lives on a basis consistent with similar property, plant and equipment. Rental income is recognised on a straight line basis over the lease term.

O BILLS AND ACCEPTANCES PAYABLE

Bills and acceptances payable represent the Group’s own bills and acceptances rediscounted and outstanding in the market.

P DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. Changes in the fair value of any derivatives that do not qualify for hedge accounting are recognised immediately in the statement of income.

The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of the instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group and the Company recognise statement of income immediately.

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group and the Company designate certain derivatives as either: (1) hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge) or (2) hedges of future cash flows attributable to a recognised asset or liability, or a highly probable forecasted transaction (cash flow hedge) or (3) hedges of a net investment in a foreign operation (net investment hedge). Hedge accounting is used for derivatives designated in this way provided certain criteria are met.

At the inception of the transaction, the Group and the Company document the relationship between hedging instruments and hedged items, as well as their risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

(a) Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of income, together with

any changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest/profit method is used is amortised to the statement of income over the period to maturity. The adjustment to the carrying amount of a hedged equity security remains in retained earnings until the disposal of the equity security.

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P DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (CONTINUED)

(b) Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The

gain and loss relating to the ineffective portion is recognised immediately in the statement of income. Amounts accumulated in equity are recycled to the statement of income in the periods in which the hedged item will affect the statement of income.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of income.

(c) Net investment hedge Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating

to the effective portion of the hedge is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the statement of income.

Gains and losses accumulated in the equity are recycled to the statement of income when the foreign operation is partially disposed or sold.

(d) Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for

hedge accounting are recognised immediately in the statement of income.

q CURRENCY TRANSLATIONS

(a) Functional and presentation currency Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment

in which the entity operates (“the functional currency”). The consolidated Financial Statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(b) Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign

exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of income, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in statement of income, and other changes in the carrying amount are recognised in equity.

Translation differences on non-monetary financial assets and liabilities, such as equity instruments held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the revaluation reserve-financial investments available-for-sale in equity.

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q CURRENCY TRANSLATIONS (CONTINUED)

(c) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional

currency different from the presentation currency are translated into the presentation currency as follows:

• assetsand liabilities foreachstatementsof financialpositionpresentedaretranslatedat theclosingrateat thedateof thestatementsof financialposition;

• income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonableapproximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the statement of income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity beginning on or after 1 January 2006 are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group has applied the transitional provision for acquisitions prior to 1 January 2006 which allows the goodwill and fair value adjustments arising from acquisitions to be treated as assets and liabilities of the parent rather than that of the foreign entities. Therefore, those goodwill and fair value adjustments either are already expressed in the parent’s functional currency or are non-monetary foreign currency items, which are reported using the exchange rates at the date of the acquisitions.

R INCOME AND DEFERRED TAxES

The tax expense for the period comprises current and deferred tax. Tax is recognised in statement of income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is recognised in other comprehensive income or directly in equity, respectively.

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits.

Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences and unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax related to the fair value re-measurement of financial investments available-for-sale, which is charged or credited directly to equity, is also credited or charged directly to equity and is subsequently recognised in the statement of income together with deferred gain or loss.

Deferred income tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the statements of financial position date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

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052Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

S SHARE CAPITAL

(a) Classification Ordinary shares and non-redeemable preference shares with discretionary dividends are classified as equity. Other shares are classified as equity

and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity.

(b) Share issue costs Incremental external costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the

proceeds.

(c) Dividends Dividends on ordinary shares are recognised as a liability when the shareholders’ right to receive the dividend is established.

T EMPLOYEE BENEFITS

(a) Short-term employee benefits The Group and the Company recognise a liability and an expense for bonuses. The Group and the Company recognise a provision where

contractually obliged or where there is a past practice that has created a constructive obligation.

Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group and the Company.

(b) Post employment benefits The Group and the Company have various post employment benefit schemes. These benefits plans are either defined contribution or defined benefit

plans.

Defined contribution plans A defined contribution plan is a pension plan under which the Group and the Company pay fixed contributions into a separate entity (a fund) and

will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

The Group’s and the Company’s contributions to defined contribution plans are charged to the statement of income. Once the contributions have been paid, the Group and the Company have no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Defined benefit plans A defined benefit plan is a pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors

such as age, years of services or compensation.

The liability in respect of a defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognised actuarial gains/losses and past service cost.

The Group determines the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity such that the amounts recognised in the Financial Statements do not differ from the amounts that would be determined at the end of the reporting period.

The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries, considering the estimated future cash outflows using market yields at statements of financial position date of government securities which have currency and terms to maturity that approximate the terms of the related liability.

Plan assets in excess of the defined obligation are subject to the asset limitation specified in FRS 119 – Employee Benefits.

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053 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

T EMPLOYEE BENEFITS (CONTINUED)

(b) Post employment benefits (Continued) Defined benefit plans (Continued) Actuarial gains and losses arise from experience adjustments and changes in actuarial assumptions. The amount of net actuarial gains and losses

recognised in the statement of income is determined by the corridor method in accordance with FRS 119 and is charged or credited to income over the average remaining service lives of the related employees participating in the defined benefit plan.

Past-service costs are recognised immediately in statement of income, unless the changes to the plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

(c) Other long term employee benefits The cost of long term employee benefits (for example, long term service leave) is accrued to match the rendering of the services by the employees

concerned using a basis similar to that for defined benefit plans for the liability which is not expected to be settled within 12 months.

(d) Termination benefits Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee

accepts voluntary redundancy in exchange for these benefits. The Group and the Company recognise termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the reporting period are discounted to their present value.

(e) Share-based compensation benefits Management Equity Scheme (“MES” or the “Scheme”) The Group has an equity-settled, share-based compensation plan of the equities in the Group which is settled by a shareholder of the Company.

The Group receiving the employees services should account for the plan as equity settled when it has no obligation to settle the share-based payment transaction. The value of the employee services received in exchange for the grant of options of the Group is recognised as an expense with a corresponding increase in the share option reserves over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted on the date of grant. Non-market vesting conditions are included in the estimation of the number of shares under options that are expected to become exercisable on the vesting date.

At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimate to the statement of income, with a corresponding adjustment to the share option reserve over the remaining vesting period.

Change in accounting policy

Prior to the adoption of the Amendment to FRS 2, the Group did not account for the transaction in its financial statements. The Group had changed its accounting policy upon adoption of Amendment to FRS 2 on 1 January 2011 retrospectively. As the Group does not have an obligation to settle the transactions with its employees, the Group has accounted for the transaction as equity settled in accordance with the Amendment to FRS 2. The impact of the change in accounting policy to the prior period presented is disclosed in Note 52.

Employee Ownership Plan Effective 1 April 2011, the Group operates an equity-settled, share-based compensation plan, where ordinary shares of the Company are purchased

from the market at market value and awarded to the eligible executive employees.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the award is fully released to relevant employees (‘the final release date’). The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense in statement of income over the period of release, based on the best available estimate of the number of shares expected to be released at each of the relevant release date. On the final release date, the estimate will be revised to equal the actual number of shares that are ultimately released to the employees.

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054Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

U IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to the statement of income unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in the statements of comprehensive income unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.

V FORECLOSED PROPERTIES

Foreclosed properties are stated at the lower of carrying amount and fair value less costs to sell and reported within “Other Assets”.

w PROVISIONS

Provisions are recognised by the Group and the Company when all of the following conditions have been met:

(i) the Group and the Company have a present legal or constructive obligation as a result of past events;

(ii) it is probable that an outflow of resources to settle the obligation will be required; and

(iii) a reliable estimate of the amount of obligation can be made.

Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present values of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

x FINANCIAL GUARANTEE CONTRACTS

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to banks, financial institutions and other bodies on behalf of customers to secure loans, overdrafts and other banking facilities.

Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. The guarantees are agreed on arm’s length terms and the value of the premium agreed corresponds to the value of the guarantee obligation. No receivable for the future premiums is recognised. Subsequent to initial recognition, the Group’s liabilities under such guarantees are measured at the higher of the amount determined in accordance with FRS 137 – “Provision, Contingent Liabilities and Contingent Assets”, and the amount initially recognised less, when appropriate, accumulative amortisation recognised in accordance with FRS 118 – “Revenue”. These estimates are determined based on experience of similar transactions and history of past losses, supplemented by the judgment of management. The fee income earned is recognised on a straight-line basis over the life of the guarantee.

Any increase in the liability relating to guarantees is reported in the statement of income within overheads.

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055 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

Y ZAkAT

This represents business zakat which is an obligatory amount payable by the Group to comply with the principles of Shariah. Zakat provision is calculated based on the “Adjusted Growth” method, at 2.5% for individual Bumiputra shareholders of the Company.

Z CASH AND CASH EqUIVALENTS

Cash and cash equivalents consist of cash in hand, bank balances and deposit placements maturing less than one month.

AA SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined the Group Management Committee as its chief operating decision-maker.

Intra-segment revenue and costs are eliminated at head office. Income and expenses directly associated with each segment are included in determining business segment performance.

AB CONTINGENT ASSETS AND CONTINGENT LIABILITIES

Contingent assets arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the Group. As this may result in the recognition of income that may never be realised, contingent assets are not recognised in the Group’s financial statements.

Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, are possible obligations that arise from past events whose existence will be confirmed only by the occurrence, or non-occurrence, of one or more uncertain future events not wholly within the control of the Group; or are present obligations that have arisen from past events but are not recognised because it is not probable that settlement will require the outflow of economic benefits, or because the amount of the obligations cannot be reliably measured.

Contingent liabilities are not recognised in the financial statements but are disclosed unless the probability of settlement is remote.

AC LIFE INSURANCE FUND

Life insurance liabilities of CIMB Aviva Assurance Berhad (“CAAB”) are recognised when contracts are entered into and premiums are charged.

These liabilities are measured by using a prospective actuarial valuation method. The liability is determined as the sum of the present value of future guaranteed benefit. For participating life policy, liabilities are measured at an appropriate level of non-guaranteed benefits, and the expected future management and distribution expenses, less the present value of future gross considerations arising from the policy discounted at the appropriate risk discount rate. The liability is based on best estimate assumptions and with due regard to significant recent experience. An appropriate allowance for provision of risk margin for adverse deviation from expected experience is made in the valuation of non-participating life policies, the guaranteed benefits liabilities of participating life policies, and non-unit liabilities of investment-linked policies.

Adjustments to the liabilities at each reporting date are recorded in statement of income. Profits originated from margins of adverse deviations on run-off contracts are recognised in statement of income over the life of the contract, whereas losses are fully recognised in statement of income during the first year of run-off.

The liability is derecognised when the contract expires, discharged or cancelled.

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CIMB GROUP HOLDINGS BERHAD

Summary of Significant Group Accounting Policiesfor the financial year ended 31 December 2011

AC LIFE INSURANCE FUND (CONTINUED)

At each reporting date, an assessment is made of whether the recognised life insurance liabilities are adequate, net of present value of in-force business (“PVIF”) and deferred acquisition cost (“DAC”) by using an existing liability adequacy test.

Any inadequacy is recorded in statement of income, initially by impairing PVIF and DAC, and subsequently by establishing technical reserves for the remaining loss. In subsequent periods, the liability for a block of business that has failed the adequacy test is based on the assumptions that are established at the time of the loss recognition. Impairment losses resulting from liability adequacy testing can be reversed in future years if the impairment no longer exists.

AD FAMILY TAkAFUL FUND

The Family Takaful fund surplus/deficit is determined by the annual actuarial valuation of the Family Takaful fund’s long-term liabilities. Any actuarial deficit in the Family Takaful fund will be made good by CIMB Aviva Takaful Berhad’s (“CATB”) shareholders’ fund via a profit-free loan or Qardh. Surplus distributable to participants is determined after deducting claims/benefits paid and payable, retakaful, provisions, reserves, commissions and management expenses and distributed in accordance with the terms and conditions prescribed by the Shariah Committee in CATB.

AE GENERAL TAkAFUL CONTRACT LIABILITIES

General takaful contract liabilities of CATB are recognised when contracts are entered into and contributions are charged.

These liabilities comprise outstanding claims provision and provision for unearned contributions.

Outstanding claims provision are based on the estimated ultimate cost of all claims incurred but not settled at the balance sheet date, whether reported or not, together with related expenses and reduction for the expected value of salvage and other recoveries. The liability is calculated at the reporting date at best estimate of the expenditure required together with related expenses less retakaful recoveries to settle the present obligation at the statements of financial position date. The liabilities are derecognised when the contract expires, discharged or cancelled.

The provision for unearned contributions represents contributions received for risks that have not yet expired. Generally, the reserve is released over the term of the contract and recognised as contribution income.

At each reporting date, CATB reviews the unexpired risks and a liability adequacy test is performed to determine whether there is any overall excess of expected claims and deferred acquisition costs over unearned contributions. This calculation uses current estimates of future contractual cash flows (taking into consideration current loss ratios) after taking into account of the investment return expected to arise on assets relating to the relevant general takaful technical provisions. If these estimates show that the carrying amount of the unearned contributions less related deferred acquisition costs is inadequate, the deficiency is recognised in statement of income by setting up a provision for liability adequacy.

AF NON-CURRENT ASSETS/DISPOSAL GROUPS HELD FOR SALE

Non-current assets/disposal groups are classified as assets held for sale and stated at the lower of carrying amount and fair value less cost to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use.

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057 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

1 GENERAL INFORMATION

The principal activity of the Company is investment holding. The principal activities of the significant subsidiaries as set out in Note 12 to the Financial Statements, consist of commercial banking, investment banking, Islamic banking, offshore banking, debt factoring, trustee and nominee services, property ownership and management, management of unit trust funds and fund management business, stock and sharebroking and the provision of other related financial services. There was no significant change in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the Bursa Malaysia Securities Berhad.

The address of the registered office and principal place of business of the Company is 5th Floor, Bangunan CIMB, Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

2 CASH AND SHORT-TERM FUNDS

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Cash and balances with banks and other financial institutions 9,299,580 8,204,383 4,979 15,457 Money at call and deposit placements maturing within one month 25,369,265 18,980,877 311,849 514,369

34,668,845 27,185,260 316,828 529,826

(i) Included in the Group’s cash and short-term funds is non-interest bearing statutory deposits of a foreign subsidiary of RM3,887,585,000 (2010: RM2,985,829,000) maintained with Bank Indonesia in compliance with their applicable legislation.

(ii) Monies held in trust in relation to the Group’s stockbroking business:

The Group

2011RM’000

2010RM’000

Clients’ trust balances and dealers’ representatives’ balances 356,400 307,538 Remisiers’ trust balances 27,683 21,532

384,083 329,070

3 DEPOSITS AND PLACEMENTS wITH BANkS AND OTHER FINANCIAL INSTITUTIONS

The Group

2011RM’000

2010RM’000

Licensed banks 2,356,084 7,864,641 Licensed investment banks 248,578 232,176 Bank Negara Malaysia and other central banks 1,475,612 3,019,806 Other financial institutions 93,738 629,200

4,174,012 11,745,823

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058Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

4 FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

The Group

Note2011

RM’0002010

RM’000

Financial assets held for trading (a) 13,665,700 16,221,146 Financial assets designated at fair value through profit or loss (b) – 861,450

13,665,700 17,082,596

(a) Financial assets held for trading

The Group

2011RM’000

2010RM’000

Money market instruments: Unquoted: Malaysian Government securities 253,409 360,214 Cagamas bonds 52,511 13,186 Malaysian Government treasury bills 90,484 57,779 Bank Negara Malaysia bills 156,856 2,597,966 Bank Negara Malaysia negotiable notes 1,817,293 2,226,623 Negotiable instruments of deposit 2,069,683 1,778,088 Bankers’ acceptances and Islamic accepted bills 575,819 740,811 Credit-linked notes 46,059 123,158 Commercial papers 168,458 163,033 Other Government’s securities 2,933,501 2,053,218 Government investment issues 147,201 320,534

8,311,274 10,434,610 quoted securities: In Malaysia

Warrants – 5 Shares 904,743 1,210,166

Outside Malaysia

Shares 6,534 26,102 Private and Islamic debt securities 305,183 57,525 Other Government bonds 448,161 79,143 Bank Indonesia certificates 67,775 1,478,043 Investment linked funds 299,213 54,017

2,031,609 2,905,001

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059 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

4 FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)

(a) Financial assets held for trading (Continued)

The Group

2011RM’000

2010RM’000

Unquoted securities: In Malaysia

Private and Islamic debt securities 1,925,800 1,628,798 Shares 6,243 5,948

Outside Malaysia

Private and Islamic debt securities 1,322,944 1,246,789 Shares 58,157 – Unit trust 9,673 –

3,322,817 2,881,535

Total financial assets held for trading 13,665,700 16,221,146

(b) Financial assets designated at fair value through profit or loss

The Group

2011RM’000

2010RM’000

Money market instruments: Unquoted: Malaysian Government Securities – 223,810 Cagamas bonds – 22,536 Khazanah bonds – 8,012 Government investment issues – 195,523

– 449,881 quoted securities: In Malaysia

Shares – 81,637 Unit trusts – 10,797

– 92,434 Unquoted securities: In Malaysia

Private and Islamic debt securities – 265,410 Shares – 2,334 Investment-linked funds – 51,391

– 319,135

Total financial assets designated at fair value through profit or loss – 861,450

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060Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

4 FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)

(b) Financial assets designated at fair value through profit or loss (Continued) Financial assets designated at fair value through profit or loss arises from securities held by an insurance subsidiary which has been reclassified

from financial assets held for trading as a result of the adoption of FRS 139 as at 1 January 2010. These securities eliminate or significantly reduce a measurement or recognition inconsistency (‘accounting mismatch’) that would otherwise have arisen from measuring the assets at a basis different from the liabilities of the insurance subsidiary.

With effect from 1 January 2011, the financial results of CIMB Aviva Assurance Berhad (“CAAB”) and CIMB Aviva Takaful Berhad (“CATB”), are now equity accounted for in the financial statements of the Group (see Note 46(a)). Hence, financial assets designated at fair value through profit or loss from securities for the financial year ended 31 December 2011 is RM Nil.

5 FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE

The Group

2011RM’000

2010RM’000

Money market instruments: Unquoted: Malaysian Government Securities 320,703 346,720 Cagamas bonds 201,174 184,494 Khazanah bonds 44,786 – Other Government securities 25,874 – Government investment issues 345,990 282,022

938,527 813,236 quoted securities: In Malaysia

Shares 26,504 115,676 Unit trusts 122,654 240,949

Outside Malaysia

Shares 21,319 12,074 Private and Islamic debt securities 371,387 24,582 Other Government bonds 2,807,382 2,635,564 Unit trusts 292,209 318,435

3,641,455 3,347,280

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061 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

5 FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE (CONTINUED)

The Group

2011RM’000

2010RM’000

Unquoted securities: In Malaysia

Private and Islamic debt securities 6,789,561 6,477,787 Shares 976,604 905,404 Loan stocks 19,774 26,624 Property funds 188 175 Investment-linked funds – 6,947 Bond funds 12,611 12,380

Outside Malaysia

Shares 207,581 80,480 Private equity and unit trust funds 81,604 224,453 Private and Islamic debt securities 1,476,710 176,323 Loan stocks 1,568 1,531

9,566,201 7,912,104

14,146,183 12,072,620 Allowance for impairment losses: Private debt securities (210,510) (240,661) Quoted shares (16,854) (27,413) Quoted bonds (3,411) – Unquoted shares (128,270) (130,874) Unit trusts (1,113) (878) Loan stocks (12,806) (14,092)

(372,964) (413,918)

13,773,219 11,658,702

Included in financial investments available-for-sale of the Group are securities in the form of unit trusts managed by CIMB – Principal Asset Management Berhad on behalf of the Group amounting to RM3,746,054,821 (2010: RM3,212,092,000).

The table below shows the movements in allowance for impairment losses during the financial year for the Group:

The Group

2011RM’000

2010RM’000

At 1 January 413,918 386,632 Net allowance made during the financial year 12,941 23,844 Amount written off (836) (5,474) Disposal of securities (53,582) (9,716) Reclassification from investment in associates – 4,986 Exchange fluctuation 523 13,646

At 31 December 372,964 413,918

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062Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

6 FINANCIAL INVESTMENTS HELD-TO-MATURITY

The Group

2011RM’000

2010RM’000

Money market instruments: Unquoted: Malaysian Government Securities 1,088,815 1,123,977 Cagamas bonds 255,977 254,817 Other government securities 490,820 – Malaysian Government investment issues 862,212 600,245 Bank Negara negotiable notes 9,986 9,948 Khazanah bonds 134,776 –

2,842,586 1,988,987 quoted securities: Outside Malaysia

Private debt securities 3,602,677 1,414,395 Islamic bonds 23,818 23,983 Medium term notes – Islamic 3,527 8,565 Other Government bonds 204,816 117,303 Bank Indonesia certificates 363,350 286,090

4,198,188 1,850,336 Unquoted securities: In Malaysia

Private debt securities 6,685,239 7,190,838 Loan stocks 30,781 31,814 Danaharta Urus Sdn Bhd (“DUSB”) bonds 795,335 795,335

7,511,355 8,017,987 Outside Malaysia

Private debt securities 2,071,299 2,036,903

16,623,428 13,894,213 Accretion of discount net of amortisation of premium 341,979 271,562 Less: Allowance for impairment losses (46,623) (45,512)

16,918,784 14,120,263

Included in the financial investments held-to-maturity of the Group as at 31 December 2011 are 10-year promissory notes of THB415 million (2010: THB746 million) maturing between 2011 to 2015. The promissory notes were received from Thai Asset Management Corporation (“TAMC”) for settlement of impaired loans transferred by CIMB Thai Bank Public Company Limited (“CIMB Thai Bank”) to TAMC. Such promissory notes are non-transferable, bear interest at the average deposit rate of 5 major banks in Thailand and availed by the Financial Institutions Development Fund. As part of the agreement to transfer the impaired loans to TAMC, CIMB Thai Bank has a gain and loss sharing arrangement with TAMC arising from the recovery of the impaired loans. During the financial year, promissory notes of THB331 million has matured and CIMB Bank Thai has recognised a gain of approximately THB1.009 billion (RM101 million) arising from the sharing arrangement.

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063 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

6 FINANCIAL INVESTMENTS HELD-TO-MATURITY (CONTINUED)

The table below shows the movements in allowance for impairment losses during the financial year for the Group:

The Group

2011RM’000

2010RM’000

At 1 January 45,512 40,914 Allowance made/(written back) during the financial year 785 (587) Exchange fluctuation 326 5,185

At 31 December 46,623 45,512

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES

(i) Derivative financial instruments The following tables summarise the contractual or underlying principal amounts of trading derivatives and financial instruments held for hedging

purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at statements of financial position date, and do not represent amounts at risk.

Trading derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in “Derivative Financial Instruments” Assets and Liabilities respectively.

The GroupFair values

The CompanyFair values

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

At 31 December 2011 Trading derivatives Foreign exchange derivatives

Currency forwards 11,664,292 152,198 (172,128) – – –

– Less than 1 year 9,407,525 107,872 (126,346) – – – – 1 year to 3 years 971,908 40,641 (22,110) – – – – More than 3 years 1,284,859 3,685 (23,672) – – –

Currency swaps 38,210,727 412,086 (328,753) – – –

– Less than 1 year 37,870,738 394,071 (324,315) – – – – 1 year to 3 years 128,276 6,806 (4,081) – – – – More than 3 years 211,713 11,209 (357) – – –

Currency spots 3,185,666 2,100 (2,329) – – –

– Less than 1 year 3,185,666 2,100 (2,329) – – –

Currency options 2,246,845 9,030 (14,226) – – –

– Less than 1 year 2,246,845 9,030 (14,226) – – –

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064Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(i) Derivative financial instruments (Continued)

The GroupFair values

The CompanyFair values

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

Cross currency interest rate swaps 16,993,262 535,129 (393,016) 315,000 – (4,164)

– Less than 1 year 3,516,246 90,581 (130,104) – – – – 1 year to 3 years 6,199,649 255,084 (106,253) 315,000 – (4,164) – More than 3 years 7,277,367 189,464 (156,659) – – –

72,300,792 1,110,543 (910,452) 315,000 – (4,164) Interest rate derivatives

Interest rate swaps 244,561,024 2,711,995 (2,338,891) 500,000 13,188 –

– Less than 1 year 32,606,090 85,636 (60,632) – – – – 1 year to 3 years 131,899,721 1,010,775 (1,050,691) – – – – More than 3 years 80,055,213 1,615,584 (1,227,568) 500,000 13,188 –

Interest rate futures 11,930,771 31,861 (2,279) – – –

– Less than 1 year 5,734,380 10,485 (2,279) – – – – 1 year to 3 years 4,844,425 17,375 – – – – – More than 3 years 1,351,966 4,001 – – – –

Interest rate options 150,000 10,407 (4,549) – – –

– Less than 1 year – 7,452 (4,542) – – – – 1 year to 3 years 100,000 2,278 – – – – – More than 3 years 50,000 677 (7) – – –

256,641,795 2,754,263 (2,345,719) 500,000 13,188 – Equity related derivatives

Index futures 17,121 1 (132) – – –

– Less than 1 year 17,121 1 (132) – – –

Equity options 8,651,175 60,008 (374,549) – – –

– Less than 1 year 1,839,406 50,392 (272,089) – – – – 1 year to 3 years 3,087,134 351 (69,162) – – – – More than 3 years 3,724,635 9,265 (33,298) – – –

Equity swaps 525,927 416 (18,399) – – –

– More than 3 years 525,927 416 (18,399) – – –

9,194,223 60,425 (393,080)

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065 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(i) Derivative financial instruments (Continued)

The GroupFair values

The CompanyFair values

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

Commodity related derivatives

Commodity options 203,200 48,048 (48,048) – – –

– Less than 1 year 34,947 10,075 (10,075) – – – – 1 year to 3 years 168,253 37,973 (37,973) – – –

Commodity swaps 80,961 4,456 (5,498) – – –

– Less than 1 year 44,312 3,730 (3,663) – – – – 1 year to 3 years 36,649 726 (1,835) – – –

Commodity futures 39,642 782 (863) – – –

– Less than 1 year 38,235 684 (845) – – – – 1 year to 3 years 1,407 98 (18) – – –

323,803 53,286 (54,409) – – – Credit related contract

Credit default swaps 1,344,019 38,374 (40,744) – – –

– Less than 1 year 158,850 24 – – – – – 1 year to 3 years 839,250 3,613 (10,290) – – – – More than 3 years 345,919 34,737 (30,454) – – –

Hedging derivatives Interest rate swaps 14,221,710 257,182 (472,290) 150,000 4,271 –

– Less than 1 year 20,911 318 (329) – – – – 1 year to 3 years 1,163,570 32,874 (10,503) 150,000 4,271 – – More than 3 years 13,037,229 223,990 (461,458) – – –

Cross currency interest rate swaps 71,131 – (597) – – –

– More than 3 years 71,131 – (597) – – –

14,292,841 257,182 (472,887) 150,000 4,271 –

Total derivative assets/(liabilities) 354,097,473 4,274,073 (4,217,291) 965,000 17,459 (4,164)

Page 68: Cimb Ar2011 (Fs)

066Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(i) Derivative financial instruments (Continued)

The GroupFair values

The CompanyFair values

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

At 31 December 2010 Trading derivatives Foreign exchange derivatives

Currency forwards 10,895,870 160,377 (155,349) – – –

– Less than 1 year 8,620,215 52,888 (127,990) – – – – 1 year to 3 years 423,654 13,602 (4,281) – – – – More than 3 years 1,852,001 93,887 (23,078) – – –

Currency swaps 34,993,961 515,653 (489,576) – – –

– Less than 1 year 34,684,832 507,854 (486,527) – – – – 1 year to 3 years 49,362 2,018 – – – – – More than 3 years 259,767 5,781 (3,049) – – –

Currency options 3,405,312 16,694 (20,901) – – –

– Less than 1 year 3,405,312 16,694 (20,901) – – –

Cross currency interest rate swaps 15,962,201 626,336 (746,157) 315,000 – (9,363)

– Less than 1 year 4,521,983 145,670 (239,900) – – – – 1 year to 3 years 6,239,274 266,962 (294,195) 315,000 – (9,363) – More than 3 years 5,200,944 213,704 (212,062) – – –

65,257,344 1,319,060 (1,411,983) 315,000 – (9,363) Interest rate derivatives

Interest rate swaps 183,436,844 1,791,631 (1,344,587) – – –

– Less than 1 year 54,389,510 339,772 (308,923) – – – – 1 year to 3 years 63,610,038 441,927 (357,772) – – – – More than 3 years 65,437,296 1,009,932 (677,892) – – –

Interest rate futures 13,746,090 18,185 (15,428) – – –

– Less than 1 year 7,276,246 8,610 (13,457) – – – – 1 year to 3 years 5,273,591 6,772 (1,971) – – – – More than 3 years 1,196,253 2,803 – – – –

Interest rate options 750,000 7,179 (3,602) – – –

– Less than 1 year 600,000 – – – – – – 1 year to 3 years 100,000 5,314 (2,818) – – – – More than 3 years 50,000 1,865 (784) – – –

197,932,934 1,816,995 (1,363,617) – – –

Page 69: Cimb Ar2011 (Fs)

067 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(i) Derivative financial instruments (Continued)

The GroupFair values

The CompanyFair values

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

Equity related derivatives

Index futures 10,845 – (145) – – –

– Less than 1 year 10,845 – (145) – – –

Equity options 10,545,680 223,081 (606,369) – – –

– Less than 1 year 3,593,370 168,358 (571,441) – – – – 1 year to 3 years 3,606,018 3,849 (3,849) – – – – More than 3 years 3,346,292 50,874 (31,079) – – –

Equity swaps 273,717 1,777 (51,329) – – –

– Less than 1 year 272,086 1,433 (51,023) – – – – 1 year to 3 years 1,631 344 (306) – – –

10,830,242 224,858 (657,843) – – – Commodity related derivatives

Commodity options 104,840 15,028 (15,028) – – –

– Less than 1 year 70,921 12,068 (12,068) – – – – 1 year to 3 years 33,919 2,960 (2,960) – – –

Commodity swaps 60,480 4,085 – – – –

– Less than 1 year 20,400 1,624 – – – – – 1 year to 3 years 40,080 2,461 – – – –

Commodity futures 60,553 1 (3,653) – – –

– Less than 1 year 60,553 1 (3,653) – – –

225,873 19,114 (18,681) – – – Credit related contract

Credit default swaps 1,397,612 31,585 (37,674) – – –

– Less than 1 year 580,483 2,805 (175) – – – – 1 year to 3 years 169,593 143 (2,386) – – – – More than 3 years 647,536 28,637 (35,113) – – –

Page 70: Cimb Ar2011 (Fs)

068Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(i) Derivative financial instruments (Continued)

The GroupFair values

The CompanyFair values

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

PrincipalamountRM’000

AssetsRM’000

LiabilitiesRM’000

Hedging derivatives Interest rate swaps 13,426,998 165,543 (215,376) 150,000 5,676 –

– Less than 1 year 1,428,650 31,058 – – – – – 1 year to 3 years 1,180,155 30,646 (6,211) 150,000 5,676 – – More than 3 years 10,818,193 103,839 (209,165) – – –

Cross currency interest rate swaps 218,378 – (43,342) – – –

– More than 3 years 218,378 – (43,342) – – –

13,645,376 165,543 (258,718) 150,000 5,676 –

Total derivative assets/(liabilities) 289,289,381 3,577,155 (3,748,516) 465,000 5,676 (9,363)

(a) Fair value hedges Fair value hedges are used by the Group and the Company to protect it against the changes in fair value of financial assets and financial

liabilities due to movements in market interest rates. The Group and the Company use interest rate swaps and cross-currency swaps to hedge against interest rate risk of loans, subordinated obligations, negotiable instruments of deposits issued and foreign bonds. For designated and qualifying fair value hedges, the changes in fair value of derivative and item in relation to the hedged risk are recognised in the statement of income. If the hedge relationship is terminated, the cumulative adjustment to the carrying amount of the hedged item is amortised in the statement of income based on recalculated effective interest rate over the residual period to maturity, unless the hedged item has been derecognised, in which case, it is released to the statement of income immediately.

For the financial year ended 31 December 2011, the Group has derecognised fair value hedge item of RM6,220,990 due to maturity of negotiable instruments of deposit. The Group has also fully amortised the cumulative fair value loss of redesignated negotiable instruments of deposit of RM22,512,000 upon its maturity.

Included in the net non-interest income (Note 33) is the net gains and losses arising from fair value hedges during the financial year as follows:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Loss on hedging instruments (150,195) (50,768) (1,363) (2,727) Gain on the hedged items attributable to the hedged risk 133,911 10,603 1,170 2,618

Page 71: Cimb Ar2011 (Fs)

069 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(i) Derivative financial instruments (Continued)(b) Net investment hedge Foreign exchange swaps and non derivative financial liabilities are used to hedge the Group’s exposure to foreign exchange risk on net

investments in foreign operations. Gains or losses on retranslation of the foreign exchange swaps are transferred to equity to offset any gains or losses on translation of the net investment in foreign operations. Ineffectiveness from hedges of net investments was recognised in the statement of income during the year for the Group of RM6,075,860 (2010: RM10,097,661). No amounts were withdrawn from equity during the financial year as there was no disposal of foreign operations.

(c) Cash flows hedge Cash flow hedges are used by the Group to protect against exposure to variability in future cash flows attributable to movements in foreign

exchange rates of financial assets and financial liabilities. The Group hedges cash flows from held-to-maturity debt securities against foreign exchange risk using currency swaps. During the financial year ended 31 December 2011, the Group has ceased cash flow hedge accounting with cumulative gain of RM225,502 remaining in equity.

(ii) Commitments and contingencies In the normal course of business, the Group and the Company enter into various commitments and incur certain contingent liabilities with legal

recourse to their customers. No material losses are anticipated as a result of these transactions and hence, they are not provided for in the Financial Statements.

These commitments and contingencies are not secured over the assets of the Group and the Company, except for certain financial assets held for trading being pledged as credit support assets for certain over-the-counter derivative contracts.

Treasury related derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in “Derivative Financial Instruments” Assets and Liabilities respectively.

The notional or principal amount of the commitments and contingencies constitute the following:

2011Principal

RM’000

2010Principal

RM’000

The Group Credit-related

Direct credit substitutes 5,255,701 4,929,234 Certain transaction-related contingent items 5,464,748 5,468,256 Short-term self-liquidating trade-related contingencies 2,549,245 3,511,093 Obligations under underwriting agreement 226,887 235,000 Irrevocable commitments to extend credit: – maturity not exceeding one year 36,370,852 33,812,453 – maturity exceeding one year 6,710,863 6,778,430 Forward assets purchases – 303,084 Miscellaneous commitments and contingencies 4,941,508 5,609,923

Total credit-related commitments and contingencies 61,519,804 60,647,473

Treasury-related

Foreign exchange related contracts: – less than one year 50,683,044 47,207,625 – one year to less than five years 11,901,101 10,641,952 – five years and above 4,523,518 3,353,629

67,107,663 61,203,206

Page 72: Cimb Ar2011 (Fs)

070Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

7 DERIVATIVE FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

(ii) Commitments and contingencies (Continued)

2011Principal

RM’000

2010Principal

RM’000

The Group (continued) Interest rate related contracts:

– less than one year 49,632,388 55,274,126 – one year to less than five years 162,478,157 88,003,758 – five years and above 37,636,526 41,825,221

249,747,071 185,103,105

Equity related contracts:

– less than one year 1,852,206 3,616,346 – one year to less than five years 4,949,209 5,121,018 – five years and above 2,392,808 2,092,883

9,194,223 10,830,247

Other treasury related contracts 26,628,646 31,285,226

Total treasury-related commitments and contingencies 352,677,603 288,421,784

414,197,407 349,069,257

The Company Foreign exchange related contracts:

– one year to less than five years 315,000 315,000

315,000 315,000

Interest rate related contracts:

– one year to less than five years 650,000 150,000

965,000 465,000

CIMB Bank has given a continuing guarantee to Bank Negara Malaysia to meet the liabilities and financial obligations and requirements of its subsidiary, CIMB Bank (L) Limited, arising from its offshore banking business in the Federal Territory of Labuan.

Not included in the above is a performance guarantee given by CIMB Group Sdn Bhd to Hang Seng Index/Hang Seng Data Services in respect of any potential breach of licensing agreement by CIMB Aviva Assurance Berhad. The Directors are of the view that the likelihood of the performance guarantee to be called on is remote.

The Group is providing a contingency funding line to its subsidiary, CIMB Thai Bank Plc (CIMB Thai), in the event of liquidity crisis in CIMB Thai.

Page 73: Cimb Ar2011 (Fs)

071 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

8 LOANS, ADVANCES AND FINANCING

(i) By type

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Overdrafts 6,052,496 6,317,493 – – Term loans/financing – Housing loans/financing 48,812,565 42,496,812 – – – Syndicated term loans 9,738,460 6,996,472 – – – Hire purchase receivables 11,614,260 11,384,643 – – – Lease receivables 109,868 32,087 – – – Factoring receivables 12,172 23,655 – – – Other term loans/financing 72,645,836 60,588,953 – – Bills receivable 3,740,413 2,636,548 – – Trust receipts 1,300,741 1,145,109 – – Claims on customers under acceptance credits 4,578,277 4,548,433 – – Staff loans [of which RM10,050,224 (2010: RM6,473,245) are to Directors] 706,835 728,594 930 1,147 Credit card receivables 5,604,180 4,981,667 – – Revolving credits 24,593,593 24,289,359 – – Share margin financing 1,882,615 1,299,816 – – Other loans 890 9,730 – –

Gross loans, advances and financing 191,393,201 167,479,371 930 1,147 Fair value changes arising from fair value hedge 398,797 44,340 – –

191,791,998 167,523,711 930 1,147 Less: Allowance for impairment losses – Individual impairment allowance (3,988,345) (4,079,367) – – – Portfolio impairment allowance (3,964,876) (4,262,959) – –

(7,953,221) (8,342,326) – –

Total net loans, advances and financing 183,838,777 159,181,385 930 1,147

(a) Included in the Group’s loans, advances and financing balances are RM69,977,000 (2010: RM75,347,000) of reinstated loans which were previously non-performing and written off prior to 2005. The reinstatement of these loans has been approved by BNM on 5 February 2010 and was done selectively on the basis of either full settlement of arrears or upon regularised payments of rescheduled loan repayments.

(b) The Group has undertaken a fair value hedge on the interest rate risk of RM7,237,885,000 (2010: RM7,663,278,000) loans, advances and financing using interest rate swaps.

The Group

2011RM’000

2010RM’000

Gross loans hedged 7,237,885 7,663,278 Fair value changes arising from fair value hedges 398,797 44,340

7,636,682 7,707,618

The fair value loss of interest rate swaps in the hedge transaction as at 31 December 2011 was RM445,176,674 (2010: RM127,755,094).

Page 74: Cimb Ar2011 (Fs)

072Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(ii) By type of customer:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Domestic banking financial institutions 57,963 65,091 – – Domestic non-bank financial institutions – others 1,705,420 2,645,801 – – Domestic business enterprises – small medium enterprises 29,824,771 24,984,641 – – – others 44,209,093 37,223,540 – – Government and statutory bodies 12,657,089 10,666,029 – – Individuals 89,303,602 80,444,835 930 1,147 Other domestic entities 3,515,254 3,878,422 – – Foreign entities 10,120,009 7,571,012 – –

Gross loans, advances and financing 191,393,201 167,479,371 930 1,147

(iii) By interest/profit rate sensitivity:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Fixed rate – Housing loans 2,124,114 3,718,109 – – – Hire-purchase receivables 11,646,009 11,403,949 – – – Other fixed rate loans 40,379,810 33,221,004 930 1,147

Variable rate – BLR plus 91,771,906 78,906,381 – – – Cost plus 23,129,879 20,295,232 – – – Other variable rates 22,341,483 19,934,696 – –

Gross loans, advances and financing 191,393,201 167,479,371 930 1,147

Page 75: Cimb Ar2011 (Fs)

073 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(iv) Loans, advances and financing analysed by their economic purposes are as follows:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Personal use 6,781,937 5,123,491 18 27 Credit card 5,604,180 4,981,667 – – Purchase of consumer durables 954 1,216 – – Construction 5,217,186 4,324,911 – – Residential property (Housing) 48,808,900 43,708,701 775 915 Non-residential property 12,758,609 11,843,651 – – Purchase of fixed assets other than land and building 16,528,217 10,261,260 – – Mergers and acquisitions 4,750,746 2,620,451 – – Purchase of securities 9,103,875 8,013,606 – – Purchase of transport vehicles 16,281,213 15,803,368 137 205 Working capital 46,078,495 46,081,461 – – Other purpose 19,478,889 14,715,588 – –

Gross loans, advances and financing 191,393,201 167,479,371 930 1,147

(v) Loans, advances and financing analysed by their geographical distribution are as follows:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Malaysia 118,894,085 111,065,224 930 1,147 Indonesia 46,022,974 37,516,196 – – Thailand 13,077,940 9,906,698 – – Singapore 9,514,291 5,964,290 – – United Kingdom 996,344 621,152 – – Hong Kong 598,442 248,187 – – Other countries 2,289,125 2,157,624 – –

Gross loans, advances and financing 191,393,201 167,479,371 930 1,147

(vi) Loans, advances and financing analysed by their residual contractual maturity are as follows:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Within one year 42,579,113 35,403,191 9 9 One year to less than three years 44,274,774 38,204,037 35 77 Three years to less than five years 21,348,048 22,449,382 7 9 Five years and more 83,191,266 71,422,761 879 1,052

Gross loans, advances and financing 191,393,201 167,479,371 930 1,147

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074Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(vii) Impaired loans, advances and financing by economic purpose:

The Group

2011RM’000

2010RM’000

Personal use 355,210 399,960 Credit card 127,609 98,523 Purchase of consumer durables 570 251 Construction 1,343,284 1,380,526 Residential property (Housing) 1,781,704 1,909,586 Non-residential property 406,835 491,942 Purchase of fixed assets other than land and building 556,579 365,872 Purchase of securities 123,855 101,641 Purchase of transport vehicles 424,208 322,967 Working capital 3,566,045 4,123,317 Other purpose 1,118,782 1,089,794

Gross impaired loans 9,804,681 10,284,379

(viii) Impaired loans, advances and financing by geographical distribution:

The Group

2011RM’000

2010RM’000

Malaysia 6,058,318 6,781,354 Indonesia 1,846,522 1,687,775 Thailand 1,442,422 1,466,154 Singapore 62,500 116,176 United Kingdom 54,025 48,095 Other countries 340,894 184,825

Gross impaired loans 9,804,681 10,284,379

(ix) Movements in the impaired loans, advances and financing are as follows:

The Group

2011RM’000

2010RM’000

At 1 January 10,284,379 11,490,890 Classified as impaired during the financial year 3,973,790 5,433,418 Reclassified as not impaired during the financial year (1,967,542) (3,346,847) Amount written back in respect of recoveries (1,380,212) (1,446,918) Arising from deemed disposal of subsidiaries (942) – Amount written off (1,202,023) (1,500,162) Purchase of impaired loans from third party 126 294 Sale of impaired loans – (145,981) Exchange fluctuation 97,105 (200,315)

At 31 December 9,804,681 10,284,379

Ratio of gross impaired loans to gross loans, advances and financing 5.12% 6.14%

Page 77: Cimb Ar2011 (Fs)

075 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(x) Movements in the allowance for impaired loans, advances and financing/bad and doubtful debts and financing are as follows:

The Group

2011RM’000

2010RM’000

Individual impairment allowance At 1 January 4,079,367 4,988,992 Net allowance made during the financial year 348,005 157,058 Amount written off (339,739) (873,331) Allowance made and charged to deferred assets 140 2,431 Amount transferred to portfolio impairment allowance (1,970) (5,795) Allowance written off in relation to deemed disposal of subsidiaries (942) – Unwinding income (73,737) (110,843) Exchange fluctuation (22,779) (79,145)

At 31 December 3,988,345 4,079,367

Portfolio impairment allowance At 1 January 4,262,959 4,252,946 Net allowance made during the financial year 539,855 816,418 Amount transferred from individual impairment allowance 1,970 5,795 Amount written off (828,307) (702,457) Allowance made/(written back) and charged to deferred assets 844 (3,352) Unwinding income (20,293) (89,698) Exchange fluctuation 7,848 (16,693)

At 31 December 3,964,876 4,262,959

Portfolio impairment allowance (inclusive of regulatory reserve) as % of gross loans, advances and financing less individual impairment allowance 2.55% 2.87%

9 OTHER ASSETS

The Group The Company

Notes2011

RM’0002010

RM’0002011

RM’0002010

RM’000

Due from brokers and clients net of allowance for impairment losses of RM18,236,179 (2010: RM15,906,849) (a) 1,352,950 1,250,003 – – Other debtors, deposits and prepayments net of allowance for doubtful debts of RM64,939,762 (2010: RM60,900,962) (b) 2,471,597 2,976,433 1,269 1,487 Due from insurers, brokers and reinsurers 28,716 25,476 – – Option premium receivable 249,461 278,032 – – Deferred assets (c) 131,204 170,961 – – Foreclosed properties net of allowance for impairment losses of RM57,153,449 (2010: RM72,613,405) 167,765 228,785 – –

Collateral pledged for derivative transactions 745,295 752,344 21,915 8,410 Due from jointly controlled entity (d) 1,371,367 1,671,488 – –

6,518,355 7,353,522 23,184 9,897

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076Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

9 OTHER ASSETS (CONTINUED)

(a) Movements of allowance for impairment losses on amount due from brokers and clients are as follows:

The Group

2011 2010

Individualimpairment

allowanceRM’000

Portfolioimpairment

allowanceRM’000

TotalRM’000

Individualimpairment

allowanceRM’000

Portfolioimpairment

allowanceRM’000

TotalRM’000

At 1 January 4,821 11,086 15,907 5,421 13,318 18,739 Allowance made during the financial year 2,872 128 3,000 763 – 763 Write back during the financial year (435) (152) (587) (966) (2,214) (3,180) Write off (164) – (164) (310) – (310) Exchange fluctuation 80 – 80 (87) (18) (105)

At 31 December 7,174 11,062 18,236 4,821 11,086 15,907

(b) Movements of allowance for doubtful debts on other debtors, deposits and prepayments are as follows:

The Group

2011Individual

impairmentallowance

RM’000

2010Individual

impairmentallowance

RM’000

At 1 January 60,901 194,493 Allowance made during the financial year 11,668 23,302 Write back during the financial year (5,175) (15,248) Arising from acquisition of a subsidiary – 669 Write off (75) (158,914) Exchange fluctuation (2,379) 16,599

At 31 December 64,940 60,901

(c) Deferred assets comprise mainly the carrying value of the excess of liabilities over assets of Common Forge Berhad (now known as Southeast Asia Special Asset Management Berhad) taken over by SBB Berhad in 2000 and will be reduced progressively by a scheme of arrangement which has been agreed by Bank Negara Malaysia. Movements in deferred assets during the financial year are as follows:

The Group

2011RM’000

2010RM’000

At 1 January 170,961 198,610 Amortisation during the financial year (40,741) (26,728) Individual impairment allowance write back/(made) 984 (921)

At 31 December 131,204 170,961

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

9 OTHER ASSETS (CONTINUED)

(d) With the adoption of FRS 139 on 1 January 2010, hire-purchase receivables belonging to PCSB were de-recognised from the Group’s loans, advances and financing as the risks and rewards relating to the cash flows of these hire-purchase receivables have been substantially transferred to PCSB. The de-recognised hire-purchase receivables are regarded as amount due from jointly controlled entity.

10 DEFERRED TAxATION

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts are shown in the statements of financial position, after offsetting:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Deferred tax assets 49,998 15,269 – – Deferred tax liabilities (134,285) (12,124) (2,122) (3,988)

(84,287) 3,145 (2,122) (3,988)

The gross movements on the deferred taxation account are as follows:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

At 1 January 3,145 292,272 (3,988) 3,012 Credited/(charged) to profit or loss (Note 38) – loans, advances and financing (103,939) (415,043) – – – unutilised tax losses 484 (8,735) – – – excess of capital allowance over depreciation 12,328 (4,758) – – – intangible assets 15,177 11,427 – – – financial investments available-for-sale (8,036) (641) – – – provision for accrued expenses (46,005) 47,490 – – – (over)/under accrual in prior years 11,231 54,048 22 231 – other temporary differences 37,506 9,127 1,844 (1,971)

(81,254) (307,085) 1,866 (1,740) Disposal of subsidiaries 3,488 – – – Transferred to equity – revaluation reserve – financial investments available-for-sale (9,666) 17,958 – – – hedging reserve – cash flow hedge – – – (5,260)

At 31 December (84,287) 3,145 (2,122) (3,988)

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

10 DEFERRED TAxATION (CONTINUED)

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Deferred tax assets (before offsetting) Loans, advances and financing 88,893 169,410 – – Financial investments available-for-sale – 45 – – Unutilised tax losses 5,889 5,801 – – Provision for accrued expenses 201,757 233,703 365 334 Other temporary differences 140,095 162,826 – –

436,634 571,785 365 334 Offsetting (386,636) (556,516) (365) (334)

Deferred tax assets (after offsetting) 49,998 15,269 – –

Deferred tax liabilities (before offsetting) Property, plant and equipment (65,759) (75,099) (36) (7) Financial investments available-for-sale (114,996) (93,110) – – Intangible assets (296,154) (357,009) – – Other temporary differences (44,012) (43,422) (2,451) (4,315)

(520,921) (568,640) (2,487) (4,322) Offsetting 386,636 556,516 365 334

Deferred tax liabilities (after offsetting) (134,285) (12,124) (2,122) (3,988)

11 STATUTORY DEPOSITS wITH CENTRAL BANkS

The non-interest bearing statutory deposits are maintained by certain subsidiaries with Bank Negara Malaysia in compliance with Section 26(2)(c) of the Central Bank of Malaysia Act, 2009, the amounts of which are determined at set percentages of total eligible liabilities. The non-interest bearing statutory deposits of a foreign subsidiary and foreign branches of the bank subsidiary are maintained with respective central banks in compliance with the applicable legislation.

12 INVESTMENT IN SUBSIDIARIES

The Company

2011RM’000

2010RM’000

Ordinary shares 7,336,383 7,336,383 Redeemable preference shares 10,552,853 8,708,941 Redeemable convertible unsecured loan stocks – 49,442

17,889,236 16,094,766 Less: Allowance for impairment loss of a subsidiary (1,275) (1,275)

17,887,961 16,093,491

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The direct subsidiaries of the Company are:

Percentage of equity held

Name of Subsidiary Principal activities2011

%2010

%

CIMB Berhad Investment holding 100 100

CIMB Group Sdn Bhd Investment holding 99.9 99.9

Commerce MGI Sdn Bhd Dormant 51 51

Commerce Asset Realty Sdn Bhd Holding of properties for letting to a related company 100 100

iCIMB (MSC) Sdn Bhd Provision of management and outsourcing services 100 100

SBB Berhad Dormant 100 100

CIMB Foundation ∞ Special purpose vehicle – –

Touch 'n Go Sdn Bhd @ Establishment, operation and management of an electronic collection system for toll and transport operators

20 20

∞ In accordance with IC 112-Consolidation: “Special Purpose Entities”, CIMB Foundation is consolidated in the Group as the substance of the relationship between the Company and the special purpose entity indicates that the entity is controlled by the Company

@ The combined interests of these subsidiaries within the Group are more than 51%

The subsidiaries held through CIMB Berhad are:

Percentage of equity held

Directly by CIMB BerhadIndirectly by the

Company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB Trustee Berhad @ Trustee services 20 20 100 100

BHLB Trustee Berhad @ Trustee services 20 20 100 100

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMB Group Sdn Bhd (“CIMBG”) are:

Percentage of equity held

Directly by CIMBGThrough CIMBG’s

subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB Bank Berhad (“CIMB Bank") Commercial banking and related financial services 99.9 99.9 – –

CIMB Investment Bank Berhad (“CIMB Investment Bank”)

Investment banking and the provision of related financial services

100 100 – –

PT Bank CIMB Niaga Tbk +

(Incorporated in the Republic of Indonesia)

Commercial banking and related financial services 96.9 96.9 1.0 1.0

PT Commerce Kapital #

(Incorporated in the Republic of Indonesia)

Investment holding 99.0 99.0 1.0 1.0

CIMB SI Sdn Bhd Trading in securities and direct principal investments 100 100 – –

CIMB SI I Sdn Bhd Investment holding – – 100 100

CIMB SI II Sdn Bhd Investment holding 100 100 – –

CIMB Private Equity Sdn Bhd Investment holding 100 100 – –

Maju Uni Concept Sdn Bhd Investment holding – – 100 100

Mutiara Makmur Ventures Sdn Bhd Investment holding – – 100 100

Semantan Investment Holdings Ltd (Incorporated in the Federal Territory

of Labuan)

Investment holding – – 100 100

Papyrus Capital Sdn Bhd Investment holding – – 100 100

Armada Investment Holdings Ltd (Incorporated in the Federal Territory

of Labuan)

Investment holding – – 84.8 84.8

CIMB General Partner Limited (Incorporated in the Federal Territory

of Labuan)

Investment holding – – 100 100

CIMB Securities International Pte Ltd +

(Incorporated in the Republic of Singapore)

Investment holding 100 100 – –

CIMB Securities (Singapore) Pte Ltd +

(Incorporated in the Republic of Singapore)

Stock and sharebroking – – 100 100

CIMB Research Pte Ltd +

(Incorporated in the Republic of Singapore)

Investment research – – 100 100

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

Percentage of equity held

Directly by CIMBGThrough CIMBG’s

subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB Securities (UK) Ltd +

(Incorporated in the United Kingdom)Securities related business – – 100 100

CIMB Securities (USA) Inc #

(Incorporated in the United States of America)

Dormant – – 100 100

CIMB Securities (HK) Ltd +

(Incorporated in Hong Kong) Securities broking, dealing and trading – – 100 100

CIMB Securities (HK) Nominees Ltd +

(Incorporated in Hong Kong) Nominee services – – 100 100

PT CIMB Securities Indonesia +

(Incorporated in the Republic of Indonesia)

Stockbroking – – 100 100

CIMB-GK Securities (Thailand) Ltd +

(Incorporated in the Kingdom of Thailand)

Dormant – – 99.9 99.9

CIMB Real Estate Sdn Bhd Real estate investment 100 100 – –

CIMB-Mapletree Management Sdn Bhd Real estate fund management – – 60 60

CIMB-Principal Asset Management Berhad

Establishment and management of unit trust fund and fund management business

60 60 – –

CIMB-Principal Asset Management Company Limited +

(Incorporated in the Kingdom of Thailand)

Investment and fund management and other related services

– – 60 60

Sathorn Asset Management Company Limited +

(Incorporated in the Kingdom of Thailand)

Asset Management – – 99.9 99.9

CIMB Principal Asset Management (S) Pte Ltd +

(Incorporated in the Republic of Singapore)

Provision of management and investment analysis services

– – 60 60

PT CIMB-Principal Asset Management +

(Incorporated in the Republic of Indonesia)

Establishment and management of unit trust fund and fund management business

– – 60.4 60.4

CIMB Wealth Advisors Berhad Distribution of unit trust funds – – 60 60

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMB Group Sdn Bhd (“CIMBG”) are (Continued):

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

Percentage of equity held

Directly by CIMBGThrough CIMBG’s

subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

i-Wealth Advisors Sdn Bhd Provision of management services and distribution of products and services

60 60 – –

CIMB Strategic Assets Sdn Bhd Investment holding 100 100 – –

Capital Advisors Partners Asia Sdn Bhd Investment advisory services – – 100 60

Capital Advisors Partners Asia Pte Ltd +

(Incorporated in the Republic of Singapore)

Investment advisory services – – 100 60

Capasia South East Asian Strategic Asset Fund (General Partner) Ltd (Incorporated in the Cayman Islands)

Investment advisory services – – 60 60

Capasia Islamic Infrastructure Fund (General Partner) Limited (Incorporated in the Federal Territory

of Labuan)

Managing private fund – – 100 60

CIMB Private Equity Advisors Sdn Bhd Investment advisory and private equity management 100 100 – –

CIG Berhad Insurance holding company 100 100 – –

CIMB Aviva Assurance Berhad ^ Life assurance business – – 51 51

CIMB Aviva Takaful Berhad ^ Takaful business – – 51 51

CIMB Insurance Brokers Sdn Bhd Insurance broking – – 100 100

PT CIMB Sun Life +

(Incorporated in the Republic of Indonesia)

Life assurance business – – 51 51

Commerce Asset Ventures Sdn Bhd (“CAV”)

Investment holding company 100 100 – –

Southeast Asia Special Asset Management Berhad

To invest in, purchase or otherwise acquire and deal with non-performing loans, credit and financing facilities or debts

100 100 – –

Kibaru Manufacturing Sdn Bhd Manufacturing of rubber components – – 64.1 64.1

CAV Private Equity Management Sdn Bhd

Providing management and advisory services – – 100 100

Commerce Technology Ventures Sdn Bhd

Investment holding company – – 100 100

VC Prestige Sdn Bhd Investment holding company – – 100 –

Commerce Agro Ventures Sdn Bhd * Investment holding company – – 33.3 33.3

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMB Group Sdn Bhd (“CIMBG”) are (Continued):

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

Percentage of equity held

Directly by CIMBGThrough CIMBG’s

subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CAV BAT Sdn Bhd Investment holding company – – 100 100

Commerce Growth Sdn Bhd Investment holding company – – 100 100

Prima Special Sdn Bhd * Investment holding company – – 30 30

Edufuture Sdn Bhd * Investment holding company – – 30 30

Metro Bumimas Sdn Bhd * Investment holding company – – 33.3 33.3

Sedia Fajar Sdn Bhd * Investment holding company – – 33.3 33.3

Peranan Dinamik Sdn Bhd* Investment holding company – – 33.3 33.3

Trace Tracker Malaysia Sdn Bhd & Provider of traceability services – – 9.7 9.7

Pesat Dinamik Sdn Bhd * Investment holding company – – 33.3 33.3

Prima Mahawangsa Sdn Bhd * Investment holding company – – 33.3 33.3

Tetap Fajar Sdn Bhd * Investment holding company – – 33.3 33.3

Vital Remarks Sdn Bhd * Manufacturing and distribution of halal meat based products

– – 17 17

Ekspedisi Yakin Sdn Bhd # Dormant – – – 100

Titan Setup Sdn Bhd # Investment holding company – – 100 100

Commerce-KPF Ventures Sdn Bhd * Investment holding company – – 30 30

Touch 'n Go Sdn Bhd @ Establishment, operation and management of an electronic collection system for toll and transport operators

– – 32.2 32.2

Radiant Direction Sdn Bhd # Dormant – – – 100

Quantum Epic Sdn Bhd # Dormant – – – 100

Goodmaid Chemical Corporation Sdn Bhd #

Manufacturing of household care products – – 99.6 99.6

Goodmaid Marketing Sdn Bhd # Trading and marketing of household care products – – 100 100

Goodmaid Industrial Supplies Sdn Bhd #

Trading of industrial chemical products – – 100 100

EQ Industry Supplies Sdn Bhd # Trading and marketing of industrial chemicals – – 100 100

Itopia Sdn Bhd #@ Provision of telephony infrastructure, products and services

– – 49 49

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMB Group Sdn Bhd (“CIMBG”) are (Continued):

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

Percentage of equity held

Directly by CIMBGThrough CIMBG’s

subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB Middle East BSC &+

(Incorporated in the Kingdom of Bahrain)

Islamic investment 50 50 – –

CIMB-Trustcapital Advisors Singapore Pte Ltd #

(Incorporated in the Republic of Singapore)

Real estate management and advisory – – 67 70

CIMB-Trustcapital AOF1 GP Pte Ltd #

(Incorporated in the Republic of Singapore)

Property fund management (including REIT manager) – – 100 100

CIMB Southeast Asia Research Sdn Bhd (CARI)

Public advocacy through research, publication and events

100 – – –

PT CIMB ASEAN Research #

(Incorporated in the Republic of Indonesia)

Public advocacy through research, publication and events

– – 100 –

& Deemed a subsidiary by virtue of board control over the company’s financial and operating policies# Audited by a firm other than member firms of PricewaterhouseCoopers International Limited+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers,

Malaysia* Effective 4th June 2010, the Group’s effective interest in these companies is based on RPS subscribed@ The combined interests of these subsidiaries within the Group are more than 51%^ These subsidiaries are now classified as associates

All the above subsidiaries, unless otherwise stated, are incorporated in Malaysia.

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMB Group Sdn Bhd (“CIMBG”) are (Continued):

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMBG’s direct subsidiary, CIMB Investment Bank are:

Percentage of equity held

Directly by CIMB Investment Bank

Through CIMB Investment Bank’s

subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB Holdings Sdn Bhd Investment holding 100 100 – –

CIMBS Sdn Bhd ^^ Dormant – – – 100

CIMSEC Nominees (Tempatan) Sdn Bhd Nominee services 100 100 – –

CIMSEC Nominees (Asing) Sdn Bhd Nominee services 100 100 – –

CIMB EOP Management Sdn Bhd (formerly known as CIMSEC Nominees

Sdn Bhd)

Nominee services 100 100 – –

CIMB Futures Sdn Bhd Futures broking 100 100 – –

CIMB Nominees (Tempatan) Sdn Bhd Nominee services 100 100 – –

CIMB Nominees (Asing) Sdn Bhd Nominee services 100 100 – –

CIMB Discount House Berhad Dormant 100 100 – –

CIMB Trustee Berhad @ Trustee services – – 20 20

BHLB Trustee Berhad @ Trustee services – – 20 20

The subsidiaries held through CIMBG’s direct subsidiary, CIMB Bank are:

Percentage of equity held

Directly by CIMB BankThrough CIMB Bank’s subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB FactorLease Bhd Leasing, hire purchase financing, debt factoring, loan management and property management

100 100 – –

CIMB Trustee Berhad @ Trustee services 20 20 40 40

CIMB Bank (L) Limited (Incorporated in the Federal Territory

of Labuan)

Offshore banking 100 100 – –

Mutiara Aset Berhad (formerly known as Bumiputra-

Commerce Finance Bhd)

Dormant 100 100 – –

iCIMB (M) Sdn Bhd Provision of management and outsourcing services 100 100 – –

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

Percentage of equity held

Directly by CIMB BankThrough CIMB Bank’s subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

CIMB Group Nominees Sdn Bhd Nominee services 100 100 – –

CIMB Group Nominees (Tempatan) Sdn Bhd

Nominee services 100 100 – –

CIMB Group Nominees (Asing) Sdn Bhd Nominee services 100 100 – –

Semerak Services Sdn Bhd Service company 100 100 – –

BBMB Finance (Hong Kong) Ltd ^^

(Incorporated in Hong Kong)Dormant – 100 – –

CIMB Islamic Bank Berhad Islamic banking and related financial services 100 100 – –

CIMB Trust Ltd (Incorporated in the Federal Territory

of Labuan)

Trustee services 100 100 – –

Bumiputra-Commerce Corporate Services Limited (Incorporated in the Federal Territory

of Labuan)

Nominee services – – 100 100

BC Management Services Limited (Incorporated in the Federal Territory

of Labuan)

Nominee services – – 100 100

Halyconia Asia Fund Limited (Incorporated in the British Virgin

Islands)

Open-ended investment fund – – 100 100

CIMB Private Equity General Partner Limited (Incorporated in the Federal Territory

of Labuan)

Fund management – – 100 100

CIMB Mezzanine General Partner Limited (Incorporated in the Federal Territory

of Labuan)

Fund management – – 100 100

CIMB Islamic Nominees (Tempatan) Sdn Bhd

(formerly known as Southern Nominees (Tempatan) Sdn Bhd)

Nominee services 100 100 – –

CIMB Islamic Nominees (Asing) Sdn Bhd

(formerly known as Southern Nominees (Asing) Sdn Bhd)

Nominee services 100 100 – –

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMBG’s direct subsidiary, CIMB Bank are (Continued):

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

Percentage of equity held

Directly by CIMB BankThrough CIMB Bank’s subsidiary company

Name of Subsidiary Principal activities2011

%2010

%2011

%2010

%

S.B. Venture Capital Corporation Sdn Bhd

Investment holding and provision of management services

100 100 – –

BHLB Properties Sdn Bhd Property ownership and management 100 100 – –

SBB Nominees (Tempatan) Sdn Bhd Nominee services 100 100 – –

SBB Nominees (Asing) Sdn Bhd Nominee services 100 100 – –

CIMB Nominees (S) Pte Ltd +

(Incorporated in the Republic of Singapore)

Nominee services 100 100 – –

SBB Capital Corporation Special purpose vehicle 100 100 – –

SFB Auto Berhad Dormant 100 100 – –

Premier Fidelity Berhad Dormant 100 100 – –

CIMB Bank PLC +

(Incorporated in Cambodia)Commercial banking and related financial services 100 100 – –

Perdana Visi Hartanah Sdn Bhd Property investment 100 100 – –

SBB Capital Markets Sdn Bhd Investment holding 100 100 – –

BHLB Trustee Berhad @ Trustee services 20 20 40 40

S.B. Properties Sdn Bhd Property ownership and management 100 100 – –

SFB Development Sdn Bhd Property investment 100 100 – –

Seal Line Trading Sdn Bhd ^^ Property investment – – – 100

SIBB Berhad Dormant 80 80 – –

Perdana Nominees (Tempatan) Sdn Bhd Nominee services – – 80 80

Commerce Returns Berhad ∞ Special purpose vehicle – – – –

CIMB Thai Bank Public Company Limited +

(Incorporated in the Kingdom of Thailand)

Banking 93.2 93.2 – –

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through CIMBG’s direct subsidiary, CIMB Bank are (Continued):

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The subsidiaries held through PT Bank CIMB Niaga Tbk are:

Percentage of equity held

Name of Subsidiary Principal activities2011

%2010

%

PT CIMB Niaga Auto Finance +

(Incorporated in the Republic of Indonesia)

Financing services 99.9 99.9

PT Kencana Internusa Artha Finance +

(Incorporated in the Republic of Indonesia)

Financing services 51 51

The subsidiaries held through CIMB Thai Bank Public Company Limited are:

Percentage of equity held

Name of Subsidiary Principal activities2011

%2010

%

CIMB Securities (Thailand) Co., Ltd. +

(Incorporated in the Kingdom of Thailand)

Stock and share broking 99.9 99.9

CT Coll Co., Ltd (formerly known as BT Business Consulting Co., Ltd.) +

(Incorporated in the Kingdom of Thailand)

Consultancy services 99.9 99.9

Centre Auto Lease Co., Ltd (formerly known as BT Leasing Co.,

Ltd.) +

(Incorporated in the Kingdom of Thailand)

Leasing/hire purchase 99 99

Worldlease Co., Ltd. +

(Incorporated in the Kingdom of Thailand)

Hire purchase of motorcycles 75 75

+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers Malaysia

∞ In accordance with IC 112-Consolidation: “Special Purpose Entities”, Commerce Returns Berhad is consolidated in the Group as the substance of the relationship between CIMB Bank and the special purpose entity indicates that the entity is controlled by CIMB Bank

@ The combined interests of these subsidiaries are more than 51%^^ Strike off during the financial year

All the subsidiaries, unless otherwise stated, are incorporated in Malaysia.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

13 INVESTMENT IN ASSOCIATES

The Group

2011RM’000

2010RM’000

Costs of investment 1,169,387 508,807

CIMB Aviva Assurance Berhad and CIMB Aviva Takaful Berhad Due to the realignment of the Board of Directors in CIMB Aviva Assurance Berhad (“CAAB”) and CIMB Aviva Takaful Berhad (“CATB”), the Group has

lost control over these subsidiaries with effect from 1 January 2011, without a change to the Group’s existing 51% equity interest held in CAAB and CATB. Consequent thereto, CAAB and CATB have ceased to be subsidiaries and have been accounted for as associates of the Group. The financial results of the insurance companies are now equity accounted for in the financial statements of the Group for the financial year ended 31 December 2011.

The Company

2011RM’000

2010RM’000

Unquoted shares, at cost 3,834 3,834

The Group’s share of income and expenses of associates are as follows:

2011RM’000

2010RM’000

Income 316,420 237,822 Expenses (145,902) (123,179) Allowance for losses on loans and advances (4,518) (6,625) Allowance written back/(made) for impairment losses 825 (450)

Profit before taxation 166,825 107,568 Taxation (32,670) (20,877)

Profit after taxation 134,155 86,691 Non-controlling interests (117) (71)

134,038 86,620

The Group’s share of the assets and liabilities of the associates are as follows:

2011RM’000

2010RM’000

Total assets 6,947,205 4,550,536 Total liabilities (6,091,558) (4,109,590)

Net assets 855,647 440,946

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

13 INVESTMENT IN ASSOCIATES (CONTINUED)

The direct associate of the Company is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Touch 'n Go Sdn Bhd Establishment, operation and management of an electronic collection system for toll and transport operators

20 20

The associates held through CAV are:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

IHS Innovations Sdn Bhd Provider and consultant specialising in reliability testing systems, vision and imaging systems

20 20

Evermal Resources Sdn Bhd Investment holding company 20.5 20.5

Qualitas Medical Group Limited (Incorporated in the Republic of

Singapore)

Provision of healthcare services – 16.1

The associate held through CAV’s subsidiary, Ekspedisi Yakin Sdn Bhd is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Opera Café Sdn Bhd Leisure and entertainment services – 49

The associates held through CAV’s subsidiary, Commerce-KPF are:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

In-fusion Solutions Sdn Bhd @ Provision of educational and training related solutions and services to various government bodies and private institutions

6 6

Qualitas Medical Group Limited (Incorporated in the Republic of

Singapore)

Provision of healthcare services – 3.1

Delphax Sdn Bhd @ Manufacturer of reconstructive & spinal implants, trauma & related orthopaedic surgical products

7.0 7.0

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

13 INVESTMENT IN ASSOCIATES (CONTINUED)

The associate held through CAV’s subsidiary, Commerce Agro Ventures Sdn Bhd is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Landas Bina Aquaventures Sdn Bhd @ Aquaculture 13.3 13.3

Kejmukda Co. Ltd @ Investment holding company 16.3 –

The associates held through CAV’s subsidiary, Commerce Technology Ventures Sdn Bhd are:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Sesama Equilab Sdn Bhd Dormant 29 29

Consolidated Liquid Eggs Sdn Bhd Dormant 30 30

Explorium (M) Sdn Bhd Provider for customer and marketing management services, e-learning and brand experience

30 30

In-fusion Solutions Sdn Bhd Provision of educational and training related solutions and services to various government bodies and private institutions

20.3 20.3

CMnet DotCom Sdn Bhd Dormant 36.5 36.5

The associates held through CIMB Bank are:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Bank of Yingkou Co. Ltd (Incorporated in the Peoples Republic

of China)

Banking 20 20

The South East Asian Strategic Assets Fund (Incorporated in the Cayman Islands)

Invest in equity and equity related securities of entities operating in infrastructure, energy and natural resources and their associated industries

31.9 31.9

SEASAF Power Sdn Bhd Investment holding 31.9 31.9

SEASAF Highway Sdn Bhd Investment holding 31.9 31.9

SEASAF Education Sdn Bhd Investment holding 31.9 31.9

SEASAF Sdn Bhd Investment holding 31.9 31.9

SEASAF 1 Resources Pte Ltd (Incorporated in the Republic of

Singapore)

Investment holding 31.9 31.9

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092Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

13 INVESTMENT IN ASSOCIATES (CONTINUED)

The associate held through CIMBG’s subsidiary, CIMB SI I Sdn Bhd is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Engage Media Sdn Bhd Operates out of home digital media network 35 35

The associate held through CIMBG’s subsidiary, CIMB SI II Sdn Bhd is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Tune Money Sdn Bhd Online financial services 25 25

The associate held through CIMBG’s subsidiary, CIG is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

CIMB Aviva Assurance Berhad ^ Life assurance business 51 51

CIMB Aviva Takaful Berhad ^ Takaful Business 51 51

The associates held through CIMBG’s subsidiary, CIMB Private Equity Sdn Bhd are:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

CIMB Private Equity 1 Sdn Bhd Investment holding 28.2 28.2

Ekuiti Erasama Sdn Bhd @ Investment holding 19.7 19.7

Bigbite Ventures Sdn Bhd Investment holding 20.1 20.1

Big Ship Sdn Bhd Investment management company 20.1 20.1

Eagle Eye Capital Sdn Bhd @ Investment holding 14.1 14.1

Silverbell Capital Sdn Bhd Investment holding 28.2 28.2

Silverbell Investment Pte Ltd (Incorporated in the Republic of

Singapore)

Investment holding 28.2 28.2

Mezzanine Holdings Sdn Bhd @ Investment holding 18.5 18.5

Top Sigma Sdn Bhd Investment holding 20.1 20.1

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093 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

13 INVESTMENT IN ASSOCIATES (CONTINUED)

The associates held through CIMBG’s subsidiary, CIMB Real Estate Sdn Bhd are:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

CMREF 1 Sdn Bhd Investment holding 24.9 24.9

Eleven Section Sixteen Sdn Bhd Property investment and management 24.9 24.9

Dynamic Concept One Sdn Bhd Property investment 24.9 24.9

Jaya Section Fourteen Sdn Bhd Property investment and management 24.9 24.9

Project Asia City Sdn Bhd Property investment and management 24.9 24.9

Forward Wealth Advisors Sdn Bhd Property management services 24.9 24.9

Sentral Parc City Sdn Bhd Property investment 24.9 24.9

Lot A Sentral Sdn Bhd @ Property investment 14.9 14.9

The associates held through PT Bank CIMB Niaga Tbk is:

Percentage of equity held

Name of Associate Principal activities2011

%2010

%

Asuransi Cigna (Incorporated in the Republic of

Indonesia)

Life insurance activities – 20

@ The combined interests of these associates within the Group are more than 20%^ These are associates of the Group in 2011

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094Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

14 INVESTMENT IN JOINTLY CONTROLLED ENTITIES

The Group

2011RM’000

2010RM’000

Share of net assets of jointly controlled entities 188,479 171,486

Unquoted shares, at cost 156,636 156,636 Accumulated share of results 31,843 14,850

188,479 171,486

The jointly controlled entities, which are incorporated in Malaysia and held under CIMB Group are as follows:

Percentage of equity held through subsidiary company

Name Principal activities2011

%2010

%

Proton Commerce Sdn Bhd Financing of vehicles 50 50

Alam-PE Holdings (L) Inc (Incorporated in the Federal Territory

of Labuan)

Owning and chartering offshore supply vessels 51 51

CIMB-Principal Islamic Asset Management Sdn Bhd

Establishment and management of unit trust fund and fund management business in accordance with shariah principles

50 50

Hasrat Eramas Sdn Bhd Investment holding 60 60

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095 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

14 INVESTMENT IN JOINTLY CONTROLLED ENTITIES (CONTINUED)

Proton Commerce Sdn Bhd On 22 October 2003, Bumiputra-Commerce Finance Berhad (“BCF”) entered into a joint venture agreement with Proton Edar Sdn Bhd (“PESB”) for the

purposes of building and operating a competitive vehicle financing business in Malaysia for vehicles distributed by PESB. Subsequently, a jointly controlled entity was incorporated under the name of Proton Commerce Sdn Bhd (“PCSB”) which is 50%:50% owned by BCF and PESB respectively. PCSB is primarily responsible for developing, managing and marketing hire purchase loans for vehicles sold to the customers of PESB. Pursuant to the joint venture, BCF issued RM200 million Perpetual Preference Shares (“PPS”) which were fully subscribed by PCSB. Pursuant to the vesting of the finance company business and the related assets and liabilities of BCF to CIMB Bank and the subsequent capital reduction exercise undertaken by BCF, the BCF PPS were cancelled, and CIMB Bank issued RM200 million PPS to PCSB.

Alam-PE Holdings (L) Inc CIMB Private Equity Sdn Bhd (“PE”) entered into a joint venture agreement with Alam Maritim Resources Berhad (“AMRB”) and set up a joint venture

company, incorporated under the name of Alam-PE Holdings (L) Inc. (“Alam-PE”), which is 51%:49% owned by Armada Investment Holding Ltd and AMRB respectively. The investment is made via an investment holding company, Armada Investment Holding Ltd, a subsidiary of PE with 84.8% equity interest.

CIMB-Principal Islamic Asset Management Sdn Bhd Following the disposal of 50% equity interest in CIMB-Principal Islamic Asset Management Sdn Bhd (“CPIAM”) by CIMB-Principal Asset Management

Berhad during the previous financial year, the Group via CIMB Group Sdn Bhd owns 50% equity interest in CPIAM and is treated as a jointly controlled entity.

Hasrat Eramas Sdn Bhd PE entered into a joint venture agreement with Koperasi Permodalan Felda Berhad (“KPFB”) and set up a jointly controlled entity, Hasrat Eramas Sdn

Bhd (“HESB”), with 60% shareholding of the issued ordinary shares of HESB. HESB is an investment holding company and is funded primarily by the issuance of redeemable preference shares (“RPS”), of which none is held by PE. The investment is classified as investment in jointly controlled entity instead of a subsidiary due to shared control of operating decisions between PE and KPFB.

The Group’s share of income and expenses of the jointly controlled entities are as follows:

2011RM’000

2010RM’000

Income 81,818 65,624 Expenses (62,206) (52,174)

Profit before taxation 19,612 13,450 Taxation (2,619) (3,902)

Net profit for the financial year 16,993 9,548

The Group’s share of the assets and liabilities of the jointly controlled entities other than those that are held in trust by CIMB Bank are as follows:

2011RM’000

2010RM’000

Non-current assets 289,389 346,881 Current assets 171,451 142,088 Current liabilities (124,211) (112,712) Long term liabilities (148,150) (204,771)

Net assets 188,479 171,486

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096Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

15 PROPERTY, PLANT AND EqUIPMENT

The Group2011 Note

Freehold land

RM’000

Leasehold land 50

years or more

RM’000

Leasehold land less

than 50 years

RM’000

Buildings on

freehold land

RM’000

Buildings on

leasehold land

50 years or more RM’000

Buildings on

leasehold land less

than 50 years

RM’000

Renovations, office

equipment, furniture and

fixtures RM’000

Computer equipment

and software RM’000

Computer equipment

and software

under lease

RM’000

Motor vehicles RM’000

General plant and

machinery RM’000

Capital work in

progress RM’000

Total RM’000

Cost At 1 January 86,357 35,113 1,804 430,589 111,366 318,104 1,572,413 839,827 62,684 129,792 17,380 14,774 3,620,203 Additions 17,376 – – – – 20,880 252,494 100,160 1,184 36,986 1,361 23,850 454,291 Disposals/written off (1,594) (601) – (31,920) (3,157) (11,168) (15,590) (17,208) (240) (18,967) (298) (417) (101,160) Transfer/reclassifications – – – – – – 9,274 3,919 (477) – – (12,716) – Deemed disposal of subsidiaries (8,544) – – (8,044) (7,648) – (8,636) (66,116) (37) (1,748) – (5,499) (106,272) Reclassified to intangible assets 19 – – – – – – (477) (1,676) – – – – (2,153) Reclassified to investment properties 16 – – – – (539) – – – – – – – (539) Reclassified to non- current assets held for sale (7,400) – – (5,516) (135) (832) – – – – – – (13,883) Exchange fluctuation 1,255 – – (4,018) 447 3,662 8,503 (1,362) 103 51 – 12 8,653

At 31 December 87,450 34,512 1,804 381,091 100,334 330,646 1,817,981 857,544 63,217 146,114 18,443 20,004 3,859,140

Accumulated depreciation and impairment loss At 1 January 9,639 8,802 956 128,535 47,583 213,871 1,012,488 629,416 50,142 64,022 11,858 (57) 2,177,255 Charge for the financial year – 825 22 5,484 2,539 20,826 180,238 94,732 5,247 21,122 1,170 – 332,205 Disposals/written off (633) (406) – (9,042) (941) (10,199) (11,410) (10,749) (205) (15,725) (279) – (59,589) Transfer/reclassifications – – – – – – – – – – – – – Deemed disposal of subsidiaries – – – (1,742) (3,566) – (3,372) (42,824) – (1,672) – (13) (53,189) Reclassified to investment properties 16 – – – – (327) – – – – – – – (327) Reclassified to non- current asset held for sale – – – (1,521) (82) (112) – – – – – – (1,715) Exchange fluctuation (176) – – (1,840) 75 2,600 6,257 (920) 47 57 – – 6,100

At 31 December 8,830 9,221 978 119,874 45,281 226,986 1,184,201 669,655 55,231 67,804 12,749 (70) 2,400,740

Net book value at 31 December 2011 78,620 25,291 826 261,217 55,053 103,660 633,780 187,889 7,986 78,310 5,694 20,074 1,458,400

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CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

15 PROPERTY, PLANT AND EqUIPMENT (CONTINUED)

The Group2010 Note

Freehold land

RM’000

Leasehold land 50

years or more

RM’000

Leasehold land less

than 50 years

RM’000

Buildings on

freehold land

RM’000

Buildings on

leasehold land

50 years or more RM’000

Buildings on

leasehold land less

than 50 years

RM’000

Renovations, office

equipment, furniture

and fixtures RM’000

Computer equipment

and software RM’000

Computer equipment

and software

under lease

RM’000

Motor vehicles RM’000

General plant and

machinery RM’000

Capital work in

progress RM’000

Total RM’000

Cost At 1 January 112,207 42,156 3,115 424,922 116,380 323,828 1,513,939 738,724 62,110 101,445 16,650 9,903 3,465,379 Additions 4,708 – – 1,541 88 10,465 164,219 106,117 1,906 45,075 1,949 12,324 348,392 Arising from acquisition of subsidiaries 49 – – – – – – 16,221 2,592 – 369 – 3,717 22,899 Disposals/written off (21,445) (7,043) (1,205) (4,781) (2,287) (559) (59,933) (18,097) (881) (16,857) (1,219) (9,137) (143,444) Transfer/reclassifications – – – – – – (11,752) 13,750 – (4) – (1,994) – Reclassified to intangible assets 19 – – – 12,368 – – (15,073) (1,638) – – – – (4,343) Reclassified from prepaid lease payments 17 – – – – – 940 – – – – – – 940 Reclassified to non- current assets held for sale – – – – – (784) – – – – – – (784) Exchange fluctuation (9,113) – (106) (3,461) (2,815) (15,786) (35,208) (1,621) (451) (236) – (39) (68,836)

At 31 December 86,357 35,113 1,804 430,589 111,366 318,104 1,572,413 839,827 62,684 129,792 17,380 14,774 3,620,203

Accumulated depreciation and impairment loss At 1 January 9,008 10,615 1,906 122,985 46,406 204,913 890,639 531,140 44,281 60,359 11,368 (57) 1,933,563 Charge for the financial year – 891 26 8,696 2,519 20,835 184,922 102,382 6,518 17,243 1,363 – 345,395 Arising from acquisition of subsidiaries 49 – – – – – – 15,569 2,041 – 335 – – 17,945 Disposals/written off – (2,704) (903) (2,826) (952) (596) (34,104) (13,449) (521) (13,892) (873) – (70,820) Transfer/reclassifications – – – – – – (8,369) 8,373 – (4) – – – Impairment charged for the financial year 633 – – 191 – – – – – – – – 824 Reclassified to intangible assets 19 – – – – – – (11,947) – – – – – (11,947) Reclassified from prepaid lease payments 17 – – – – – 9 – – – – – – 9 Reclassified to non- current asset held for sale – – – – – (427) – – – – – – (427) Exchange fluctuation (2) – (73) (511) (390) (10,863) (24,222) (1,071) (136) (19) – – (37,287)

At 31 December 9,639 8,802 956 128,535 47,583 213,871 1,012,488 629,416 50,142 64,022 11,858 (57) 2,177,255

Net book value at 31 December 2010 76,718 26,311 848 302,054 63,783 104,233 559,925 210,411 12,542 65,770 5,522 14,831 1,442,948

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098Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

15 PROPERTY, PLANT AND EqUIPMENT (CONTINUED)

The Company

Leasehold land 50

years or more

RM’000

Buildings on

freehold land

RM’000

Buildings on

leasehold land

RM’000

Renovations, office

equipment, furniture

and fixtures RM’000

Computer equipment

and software

RM’000

Motor vehiclesRM’000

General plant and

machinery RM’000

Capital work in

progress RM’000

Total RM’000

2011 Cost At 1 January 6,792 31 45,687 3,420 202 2,635 39 634 59,440 Additions – – – 2,037 9 – 158 – 2,204 Disposals – – – (45) (50) – (24) (634) (753)

At 31 December 6,792 31 45,687 5,412 161 2,635 173 – 60,891

Accumulated depreciation At 1 January 2,592 31 20,795 1,614 187 1,744 6 – 26,969 Charge for the financial year 168 – 1,469 619 13 79 17 – 2,365 Disposals – – – (41) (4) – (5) – (50)

At 31 December 2,760 31 22,264 2,192 196 1,823 18 – 29,284

Net book value at 31 December 2011 4,032 – 23,423 3,220 (35) 812 155 – 31,607

2010 Cost At 1 January 6,792 31 45,687 3,220 654 2,072 – – 58,456 Additions – – – 1,062 – 563 39 634 2,298 Disposals – – – (862) (452) – – – (1,314)

At 31 December 6,792 31 45,687 3,420 202 2,635 39 634 59,440

Accumulated depreciation At 1 January 2,434 31 19,438 1,523 619 1,486 – – 25,531 Charge for the financial year 158 – 1,357 336 21 258 6 – 2,136 Disposals – – – (245) (453) – – – (698)

At 31 December 2,592 31 20,795 1,614 187 1,744 6 – 26,969

Net book value at 31 December 2010 4,200 – 24,892 1,806 15 891 33 634 32,471

Page 101: Cimb Ar2011 (Fs)

099 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

16 INVESTMENT PROPERTIES

The Group NoteFreehold land

RM’000

Buildings on freehold land

RM’000

Buildings on leasehold land

less than 50 years

RM’000

Buildings on leasehold land

50 years or more RM’000

Total RM’000

2011 At 1 January 905 4,554 2,900 52,857 61,216 Additions – 1,200 – – 1,200 Reclassification (79) 79 – – – Reclassified from property, plant and equipment 15 – – – 212 212 Reclassified to prepaid lease payment 17 – – (689) – (689) Reclassified to non-current assets held for sale 51 (389) (1,111) – (771) (2,271) Fair value adjustments – – – (52,858) (52,858) Exchange fluctuation – 1,200 – 643 1,843

At 31 December 437 5,922 2,211 83 8,653

2010 At 1 January 15,975 4,617 52,800 46,957 120,349 Disposals (14,842) (500) – – (15,342) Reclassification (228) 228 – – – Reclassified to non-current assets held for sale 51 – – (46,804) – (46,804) Fair value adjustments – – 2,073 6,559 8,632 Exchange fluctuation – 209 (5,169) (659) (5,619)

At 31 December 905 4,554 2,900 52,857 61,216

Page 102: Cimb Ar2011 (Fs)

100Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

16 INVESTMENT PROPERTIES (CONTINUED)

The CompanyFreehold land

RM’000

Buildings on freehold land

RM’000Total

RM’000

2011 Cost At 1 January 1,708 4,149 5,857 Disposals (1,473) (3,588) (5,061)

At 31 December 235 561 796

Accumulated depreciation At 1 January – 1,517 1,517 Charge for the financial year – 110 110 Disposals – (1,358) (1,358)

At 31 December – 269 269

Accumulated impairment loss At 1 January 633 191 824 Disposals (633) (191) (824)

At 31 December – – –

Net book value at 31 December 2011 235 292 527

2010 Cost At 1 January/31 December 1,708 4,149 5,857

Accumulated depreciation At 1 January – 1,392 1,392 Charge for the financial year – 125 125

At 31 December – 1,517 1,517

Accumulated impairment loss At 1 January – – – Impaired during the financial year 633 191 824

At 31 December 633 191 824

Net book value at 31 December 2010 1,075 2,441 3,516

The investment properties are valued annually at fair value based on market values determined by independent qualified valuers. The following amounts have been reflected in the statement of income:

The Group

2011RM’000

2010RM’000

Rental income 559 1,703 Operating expenses arising from investment properties that generated the rental income – (163)

Page 103: Cimb Ar2011 (Fs)

101 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

17 PREPAID LEASE PAYMENTS

The Group2011 Note

Leaseholdland less

than 50 yearsRM’000

TotalRM’000

Cost At 1 January 289,364 289,364 Reclassified to non-current assets held for sale 51 (693) (693) Reclassified from investment properties 16 689 689 Disposals/write-off (58) (58) Exchange fluctuation (109) (109)

At 31 December 289,193 289,193

Amortisation and impairment loss At 1 January 103,822 103,822 Amortisation during the financial year 14,910 14,910 Disposals/write-off (34) (34) Reclassified to non-current assets held for sale 51 (2) (2) Exchange fluctuation (67) (67)

At 31 December 118,629 118,629

Net book value at 31 December 2011 170,564 170,564

The Group2010 Note

Leaseholdland less

than 50 yearsRM’000

TotalRM’000

Cost At 1 January 291,120 291,120 Disposals/write-off (823) (823) Reclassified to property, plant and equipment 15 (940) (940) Exchange fluctuation 7 7

At 31 December 289,364 289,364

Amortisation and impairment loss At 1 January 43,946 43,946 Amortisation during the financial year 60,483 60,483 Disposals/write-off (601) (601) Reclassified to property, plant and equipment 15 (9) (9) Exchange fluctuation 3 3

At 31 December 103,822 103,822

Net book value at 31 December 2010 185,542 185,542

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102Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

17 PREPAID LEASE PAYMENTS (CONTINUED)

Future amortisation of prepaid land lease is as follows:

The Group

2011Leaseholdland less

than 50 yearsRM’000

2010Leaseholdland less

than 50 yearsRM’000

– Not later than one year 14,910 14,466 – Later than one year and not later than five years 59,642 57,865 – More than five years 96,012 113,211

170,564 185,542

18 GOODwILL

The Group

Note2011

RM’0002010

RM’000

Cost At 1 January – as previously reported 8,195,692 7,705,392 – arising from fair value adjustments on the completion of initial accounting of additional interest in Touch ‘n Go (“TnG”) 52(ii)(a)(i) (8,037) –

As restated 8,187,655 7,705,392 Goodwill arising from business combinations: – 51,082

– Acquisition of additional interest in subsidiary – TnG – 59,119 – Arising from fair value adjustments on the completion of initial accounting of additional interest in TnG 52(ii) – (8,037)

Acquisition of additional interest in PT Bank CIMB Niaga Tbk – 573,939 Deconsolidation of CAV subsidiary – (9,535) Deemed disposal of insurance subsidiaries 46(a) (26,549) – Exchange fluctuation 117,606 (133,223)

At 31 December 8,278,712 8,187,655

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103 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

18 GOODwILL

The Group

Note2011

RM’0002010

RM’000

Impairment At 1 January (36,223) (10,739) Impairment charge during the financial year – (25,484)

At 31 December (36,223) (36,223)

Net book value at 31 December 8,242,489 8,151,432

Allocation of goodwill to cash-generating-units Goodwill has been allocated to the following cash-generating-units (“CGUs”). These CGUs do not carry any intangible assets with indefinite useful lives:

Acquisition CGU2011

RM’0002010

RM’000

CIMB Investment Bank Berhad Corporate and Investment Banking 21,547 21,547 CIMB Securities International Pte Ltd Corporate and Investment Banking 153,081 153,081 CIMB SI Sdn Bhd Corporate and Investment Banking 19,246 19,246 Commerce Asset Ventures Sdn Bhd Asset Management 10,242 10,242 Insurance entities Insurance 1,500 28,049 PT Bank CIMB Niaga Tbk Foreign Banking Operations 2,578,349 2,578,349 SBB Berhad Retail Banking 1,101,075 1,101,075 Business Banking 911,000 911,000 Corporate and Investment Banking 419,000 419,000 Islamic Banking 136,000 136,000 Direct Banking Group 587,000 587,000 Treasury 537,000 537,000 CIMB-Principal Asset Asset Management 281,772 281,772 CIMB Thai Bank Public Company Limited Foreign Banking Operations 1,199,277 1,199,277 Touch 'n Go Sdn Bhd Others 51,082 51,082 Exchange fluctuation 235,318 117,712

8,242,489 8,151,432

Page 106: Cimb Ar2011 (Fs)

104Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

18 GOODwILL (CONTINUED)

Impairment test for goodwill Value-in-use

The recoverable amount of CGU is determined based on the value-in-use calculations. These calculations use pre-tax cash flow projections based on the 2012 financial budgets approved by the Board of Directors, projected for five years based on the average historical Gross Domestic Product (“GDP”) growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond the five year period are extrapolated using the estimated growth rates and discounted using pre-tax discount rates which reflect the specific risks relating to the CGU. The cash flow projections are derived based on a number of key factors including the past performance and management’s expectation of market developments.

The estimated growth rates and discount rates used for value-in-use calculations are as follows:

2011 2010

Growth rate Discount rate Growth rate Discount rate

Corporate and Investment Banking 2.00%-5.00% 6.54%-12.24% 2.00% – 5.00% 7.12% – 19.23% Asset Management 5.00% 8.72% 3.00% – 5.00% 8.89% Consumer Banking 5.00% 8.72% 5.00% 8.89% Treasury and Investment 5.00% 8.72% 5.00% 8.89% Foreign banking operation 2.00% 12.33%-12.82% 2.00% 10.43%-11.59% Others 2.00-5.00% 8.72% 4.20% – 5.00% 8.89%

Management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of any CGU to exceed its recoverable amount.

Impairment charge There is no impairment charge for the current financial year. (2010: Impairment charge of RM25.5 million from Asset Management).

19 INTANGIBLE ASSETS

The Group Note

Customer relationship

RM’000

Core deposits RM’000

Securities stockbroking

license RM’000

Computer software

RM’000

Mutual fund

license* RM’000

Insurance broker

license* RM’000

Total RM’000

2011 Cost At 1 January – As previously reported 211,795 1,348,558 29,685 855,503 1,906 899 2,448,346 – Arising from fair value adjustments on the completion of initial accounting for acquisition of additional interest in Touch ’n Go 52(ii)(a)(i) – – – 8,037 – – 8,037

As restated 211,795 1,348,558 29,685 863,540 1,906 899 2,456,383 Additions during the financial year – – – 308,056 – – 308,056 Disposals during the financial year – – – (7,037) – – (7,037) Reclassified from property, plant and equipment 15 – – – 2,153 – – 2,153 Deemed disposal of subsidiaries – – – (13,929) – – (13,929) Exchange fluctuation – – 1,254 (1,960) 101 – (605)

At 31 December 211,795 1,348,558 30,939 1,150,823 2,007 899 2,745,021

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105 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

19 INTANGIBLE ASSETS (CONTINUED)

The Group Note

Customer relationship

RM’000

Core deposits RM’000

Securities stockbroking

license RM’000

Computer software

RM’000

Mutual fund

license* RM’000

Insurance broker

license* RM’000

Total RM’000

Accumulated amortisation and impairment At 1 January 80,283 316,874 29,534 478,329 31 – 905,051 Amortisation during the financial year 21,141 110,641 – 110,099 298 – 242,179 Impairment during the financial year – – – (1,916) – – (1,916) Disposals during the financial year – – – (5,134) – – (5,134) Deemed disposal of subsidiaries – – – (7,626) – – (7,626) Exchange fluctuation – – 1,254 (986) 320 – 588

At 31 December 101,424 427,515 30,788 572,766 649 – 1,133,142

Net book value at 31 December 2011 110,371 921,043 151 578,057 1,358 899 1,611,879

2010 Cost At 1 January 211,795 1,348,558 30,935 720,989 2,025 899 2,315,201 Arising from fair value adjustements on the completion of additional acquisition of additional interest in subsidiary 49 – – – 8,037 – – 8,037 Arising from acquisition of a subsidiary 49 – – – 19,141 – – 19,141 Additions during the financial year – – – 168,250 – – 168,250 Disposals during the financial year – – – (57,170) – – (57,170) Reclassified from property, plant and equipment 15 – – – 4,343 – – 4,343 Exchange fluctuation – – (1,250) (50) (119) – (1,419)

At 31 December 211,795 1,348,558 29,685 863,540 1,906 899 2,456,383

Accumulated amortisation and impairment At 1 January 50,739 165,831 30,783 399,969 95 – 647,417 Arising from acquisition of a subsidiary 49 – – – 14,252 – – 14,252 Amortisation during the financial year 29,544 151,043 – 90,921 – – 271,508 Disposals during the financial year – – – (38,875) – – (38,875) Reclassified from property, plant and equipment 15 – – – 11,947 – – 11,947 Exchange fluctuation – – (1,249) 115 (64) – (1,198)

At 31 December 80,283 316,874 29,534 478,329 31 – 905,051

Net book value at 31 December 2010 131,512 1,031,684 151 385,211 1,875 899 1,551,332

* Mutual fund license and insurance broker license are not amortised as they have an infinite life. They are assessed for impairment on an annual basis.

The above intangible assets include software under construction at cost of RM429,321,508 (2010: RM246,949,720).

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

19 INTANGIBLE ASSETS (CONTINUED)

The valuation of customer relationship was determined through the sum of the discounted future excess earnings attributable to existing customers over the remaining life span of the customer relationships. Income from existing credit card, revolving credit, overdraft and trade finance loan base was projected, adjusted for expected attrition and taking into account applicable costs to determine future excess earnings. The discount rate used in the valuation of customer relationships was 9.9%-10%, which is arrived at using the weighted average cost of capital adjusted for the risk premium after taking into consideration the average market cost of equity.

The valuation of core deposits acquired in a business combination was derived by discounting the anticipated future benefits in the form of net interest savings from core deposits. The discount rate used was 8.0%-8.4%, which was derived from the average of the weighted average cost of capital and the cost of equity, reflecting the lower risk premium for core deposit intangibles compared with equity returns.

The remaining amortisation period of the intangible assets with finite life is as follows:

Customer relationships: – credit card 6.5 years – revolving credit 1 – 2 years – overdraft 3 – 4 years – trade finance 2 years

Core deposits 2.5 – 17 years

Computer software 3 – 15 years

20 DEPOSITS FROM CUSTOMERS

(i) By type of deposit

The Group

2011RM’000

2010RM’000

Demand deposits 51,191,447 43,982,722 Savings deposits 25,380,012 22,242,066 Fixed deposits 98,439,974 90,291,236 Negotiable instruments of deposit 3,017,584 1,545,997 Others 43,904,125 41,783,643

221,933,142 199,845,664

The maturity structure of fixed deposits and negotiable instruments of deposit is as follows:

The Group

2011RM’000

2010RM’000

Due within six months 87,378,439 77,723,485 Six months to one year 10,628,247 10,887,119 One year to three years 1,455,173 1,281,316 Three years to five years 1,583,660 1,677,355 More than five years 412,039 267,958

101,457,558 91,837,233

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

20 DEPOSITS FROM CUSTOMERS (CONTINUED)

(ii) By type of customer

The Group

2011RM’000

2010RM’000

Government and statutory bodies 12,579,786 14,123,891 Business enterprises 102,071,661 95,496,601 Individuals 84,078,467 70,213,582 Others 23,203,228 20,011,590

221,933,142 199,845,664

21 DEPOSITS AND PLACEMENTS OF BANkS AND OTHER FINANCIAL INSTITUTIONS

The Group

2011RM’000

2010RM’000

Licensed banks 8,549,707 7,241,711 Licensed finance companies 129,555 145,025 Licensed investment banks 200,041 529,845 Bank Negara Malaysia 372,677 1,598,400 Other financial institutions 3,712,329 3,577,176

12,964,309 13,092,157

The Group has undertaken a fair value hedge on the interest rate risk of the negotiable instruments of deposit amounting to RM70,000,000 (2010: RM1,025,300,000) using interest rate swaps.

The Group

2011RM’000

2010RM’000

Negotiable instruments of deposit 70,000 1,025,300 Fair value changes arising from fair value hedges 721 (13,613)

70,721 1,011,687

The fair value gain of the interest rate swaps in this hedge transaction as at 31 December 2011 was RM3,577,351 (2010: fair value loss of RM13,843,746).

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

22 OTHER LIABILITIES

The Group The Company

Note2011

RM’0002010

RM’0002011

RM’0002010

RM’000

Due to brokers and clients 1,732,776 1,381,307 – – Expenditure payable 1,534,593 1,788,075 – – Provision for legal claims 128,254 138,319 – – Sundry creditors 981,769 900,913 3,188 1,463 Insurance fund – life and takaful insurance business 45,397 998,019 – – Insurance fund – general insurance business (a) – 541,062 – – Allowance for commitments and contingencies (b) 33,061 88,631 – – Post employment benefit obligations 23 282,427 271,273 54 52 Credit card expenditure payable 125,537 221,237 – – Call deposit borrowing 402,705 281,833 – – Others 1,561,291 2,013,999 – –

6,827,810 8,624,668 3,242 1,515

(a) Insurance fund – general insurance business

The Group

2011RM’000

2010RM’000

Participants’ fund – 226,840 Investment-linked fund – 250,397 Surplus – (18,562) Provision for outstanding claims – 54,915 Unearned premium reserve – 27,472

– 541,062

With effect from 1 January 2011, CATB is now equity accounted for (see note 46 (a) to financial statements). As such, the insurance fund – general insurance business as at financial year ended 31 December 2011 is RM Nil.

(b) The movements in the allowance for commitments and contingencies are as follows:

The Group

2011RM’000

2010RM’000

At 1 January 88,631 72,716 Allowance (written back)/made during the financial year (55,435) 20,900 Payment made during the financial year (477) – Exchange fluctuation 342 (4,985)

At 31 December 33,061 88,631

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

23 POST EMPLOYMENT BENEFIT OBLIGATIONS

The Group The Company

Note2011

RM’0002010

RM’0002011

RM’0002010

RM’000

Defined contribution plan – EPF (a) 19,118 15,754 – 52 Defined benefit plans (b) 263,309 255,519 – –

282,427 271,273 – 52

(a) Defined contribution plan Group companies incorporated in Malaysia contribute to the Employees Provident Fund (“EPF”), the national defined contribution plan. Once the

contributions have been paid, the Group and the Company have no further payment obligations.

(b) Defined benefit plans The Group operates final salary defined benefit plans for its employees in Malaysia, Indonesia, Thailand and Singapore, the assets of which are held

in separate trustee-administered funds. The latest actuarial valuations of the plans in Indonesia, Thailand and Singapore were carried out as at 31 December 2011.

The amount recognised in the statements of financial position in respect of defined benefit plans is as follows:

The Group

2011RM’000

2010RM’000

Present value of funded obligations 544,838 538,526 Fair value of plan assets (301,522) (398,838)

Status of funded plan 243,316 139,688 Present value of unfunded obligations 66,138 96,930 Unrecognised actuarial losses (45,464) (21,477) Unrecognised past service costs (681) 40,378

Liability 263,309 255,519

The amount recognised in the statement of income in respect of defined benefit plans is as follows:

The Group

2011RM’000

2010RM’000

Current service costs 38,325 36,601 Interest costs 39,637 48,308 Expected return on plan assets (32,616) (34,102) Net actuarial losses recognised during the year 1,951 (510) Past service costs 5,139 523 Curtailment gain of unrecognised loss (5,046) (15,862) Termination (269) (9,328)

Total included in personnel costs (Note 34) 47,121 25,630

The actual return on plan assets of the Group was RM23,192,000 (2010: RM43,108,000).

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

23 POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

(b) Defined benefit plans (Continued) The movements in the defined benefit obligation over the financial year are as follows:

The Group

2011RM’000

2010RM’000

At 1 January 635,456 508,631 Current service costs 38,325 36,601 Interest costs 39,637 48,308 Actuarial gains (3,075) (11,928) Benefits paid (179,452) (16,558) Past service costs non-vested benefits 6,546 512 Past service costs vested benefits 4,985 11 Effects of changes in actuarial assumption 76,298 47,690 Curtailments (5,642) (18,550) Exchange fluctuation (2,102) 40,739

At 31 December 610,976 635,456

The movements in the fair value of plan assets for the financial year are as follows:

The Group

2011RM’000

2010RM’000

At 1 January 398,838 358,906 Expected return on plan assets 32,616 34,102 Actuarial losses (14,810) (11,856) Employer contributions 3,617 11,030 Benefits paid (123,632) (10,081) Exchange fluctuation 4,893 16,737

At 31 December 301,522 398,838

To develop the expected long-term rate of return on assets assumption, the Group considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

The principal actuarial assumptions used in respect of the Group’s defined benefit plans are as follows:

The Group

2011%

2010%

Discount rates 3.50 – 9.00 6.60 – 11.00 Expected return on plan assets 11.00 5.00 – 11.00 Future salary increases 5.00 – 8.00 6.00 – 8.00

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

23 POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

(b) Defined benefit plans (Continued) The expected contribution to post employment benefits plan for the financial year ending 31 December 2012 is RM3,617,000 (2011: RM3,551,000)

to the Group.

2011RM’000

2010RM’000

2009RM’000

2008RM’000

2007RM’000

The Group As at 31 December Present value of funded defined benefit obligation 544,838 538,526 410,414 351,129 318,032 Fair value of plan assets (301,522) (398,838) (358,906) (247,806) (288,677)

Deficit 243,316 139,688 51,508 103,323 29,355

Experience adjustments on plan liabilities (3,075) (11,928) 17,846 23,187 19,190 Experience adjustments on plan assets (14,810) (11,856) 41,040 (61,236) 23,323

24 BONDS

The Group

Note2011

RM’0002010

RM’000

USD140 million bonds 2009/2014 (“USD 140 million bonds”) (a) – 423,982 IDR1,500,000 million bonds (b) 521,225 –

521,225 423,982

(a) USD140 million bonds An indirect subsidiary, CIMB Bank (L) Limited, a wholly-owned subsidiary of CIMB Bank, has issued a 2 year senior unsecured USD140 million

bonds guaranteed by the Company. The USD140 million bonds were issued at par on 17 April 2009 and bear an interest rate of 3.00% per annum payable annually in arrears on 15 April 2010 and 15 April 2011. The USD140 million bonds are not listed on any exchange and shall be redeemed at the nominal value on the maturity date. The USD140 million bonds were fully subscribed by TPG Malaysia Finance, L.P.

The USD140 million bonds has matured on 15 April 2011.

(b) IDR1,500,000 million bonds In 2011, a direct subsidiary, CIMB Niaga issued IDR1,500,000 million bonds with fixed interest rates. The bonds are divided into two series:

(i) Series A Bond The nominal value of the bonds amounted to IDR 180,000 million with a tenor of 3 years which will mature on 23 December 2014. It bears

fixed interest rate of 7.375% per annum.

(ii) Series B Bond The nominal value of the bonds amounted to IDR 1,320,000 million with a tenor of 5 years which will mature on 23 December 2016. It bears

fixed interest rate of 8.30% per annum.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

25 OTHER BORROwINGS

The Group The Company

Note2011

RM’0002010

RM’0002011

RM’0002010

RM’000

Syndicated term loan – USD300 million (a) – 925,050 – – Syndicated term loan – USD100 million (b) 318,052 308,350 318,052 308,633 Commercial Papers/Medium Term Notes (c) 861,382 257,118 946,804 343,623 Term loan (d) 2,300,642 1,470,922 2,001,196 1,012,092 Others (e) 1,843,956 822,147 – –

5,324,032 3,783,587 3,266,052 1,664,348

(a) In 2006, an indirect subsidiary, CIMB Bank (L) Limited, a wholly owned subsidiary of CIMB Bank, secured a term loan which bears floating interest rates of LIBOR + 0.19% per annum and is guaranteed by CIMB Bank. The term loan has matured on 22 June 2011.

(b) In 2010, the Company secured a syndicated term loan amounting to USD100 million which will mature on 2 December 2013. It bears floating interest rate of LIBOR + 0.80% per annum.

(c) The Conventional Commercial Papers (“CPs”), Conventional Medium Term Notes (“MTNs”) and Islamic Medium Term Notes (“iMTNs”) were issued by the Company. The aggregate outstanding nominal value of the CPs, MTN, and iMTN at any point in time shall not exceed RM6 billion.

The main features of the CPs are as follows:

(i) The CPs was issued at discount on zero coupon basis. The discount rate for the CPs ranges from 3.00% to 3.70%;

(ii) The tenure ranges from 1 month to 6 months. The CPs was issued in 2010, and had matured in 2010.

The main features of the MTNs and iMTNs are as follows:

(i) The MTNs and iMTNs were issued at par. The MTNs carry a fixed interest rate of 4.20% per annum and the iMTNs carry a fixed dividend rate of 5.05% per annum;

(ii) On 30 May 2008, the Company issued RM350 million of iMTNs which will mature on 30 May 2013;

(iii) In 2009, the Company has undertaken a fair value hedge on the profit rate risk amounting to RM150 million of the RM350 million iMTNs using profit rate swaps.

The Company

2011RM’000

2010RM’000

Islamic Medium Term Notes, at cost 150,000 150,000 Fair value changes arising from fair value hedge (9,052) (7,882)

140,948 142,118

The fair value gain of profit rate swaps in these hedge transactions as at 31 December 2011 was RM4,270,816 (2010: RM5,676,287).

(iv) In 2011, the Company issued RM100 million Commercial Papers and RM500 million MTNs which will mature on 27 January 2012 and 14 April 2016. The Commercial Papers and MTNs carry an interest rate of 3.40% and 4.20% respectively.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

25 OTHER BORROwINGS (CONTINUED)

(d) In 2009, the Company secured a term loan amounting to RM1.0 billion to refinance its existing borrowings. The term loan is repayable in full at the end of three years on 26 June 2012 and bears a floating interest rate of 3.73% per annum.

In 2011, the Company secured another term loan amounting to RM1.0 billion. The term loan is repayable in full at the end of three years on 27 October 2014 and bears a floating interest rate of 3.36% per annum.

In 2008, PT CIMB Niaga Tbk (“CIMB Niaga”) secured a term loan amounting to USD25 million which bears a floating interest rate of 1.6% per annum. The term loan matured on 13 June 2011.

In 2009, CIMB Niaga secured a term loan amounting to USD45 million which will mature on 2012. It bears a floating interest rate of 1.01% per annum.

In 2010, Sathorn Asset Management Co. Limited (“STAMC”) secured a term loan amounting to THB2,910,000,000 which bears a floating interest rate of 0.85% per annum. The term loan matured on 28 December 2011.

On 27 December 2011, STAMC secured a term loan amounting to THB2,500,000,000 which will mature on 29 December 2012. It bears a floating interest rate of 0.85% per annum.

(e) Included in “others” is CIMB Bank’s funding obtained through the securitisation of its hire purchase receivables to a third party:

On 4 November 2011, the funding – 1st tranche of RM180 million is raised for an effective interest rate of 2.85% per annum, payable on monthly basis with coupon payment due on every 28th of the month, and will mature on 28 October 2016.

On 16 December 2011, the funding – 2nd tranche of RM320 million is raised for an effective interest rate of 3.0% per annum, payable on monthly basis with coupon payment due on every 28th of the month, and will mature on 28 October 2016.

The Group continues to recognise the hire purchase receivables on its statements of financial position as at 31 December 2011 as the Group continues to retain the risk and rewards of the hire purchase receivables.

26 SUBORDINATED NOTES

The Group The Company

Note2011

RM’0002010

RM’0002011

RM’0002010

RM’000

Subordinated Notes 2006/2011 (USD200 million) (a) – 443,580 – – Subordinated Notes 2010/2017 (IDR1,380,000 million) (b) 496,607 467,108 – – Subordinated Notes 2010/2020 (IDR1,600,000 million) (c) 568,762 546,692 – – Subordinated bonds RM1.5 billion (d) 1,520,952 1,506,340 – – Subordinated bonds RM1.0 billion (e) 1,015,786 1,000,000 – – Subordinated bonds RM1.0 billion (f) 991,868 947,673 – – Subordinated Notes (USD50 million) (g) – 158,387 – – Subordinated Notes (USD40 million) (h) 133,734 126,237 – – Subordinated Notes – THB544 million (i) 54,843 55,932 – – Subordinated Sukuk – RM550 million (j) 545,590 295,203 – – Subordinated Notes – RM1 billion (k) 1,027,297 999,414 – – Subordinated Notes – RM1 billion (k) 1,066,054 998,774 – – Subordinated Fixed Rate Notes RM1.38 billion (l) 1,380,552 1,380,000 1,380,552 1,380,000 Subordinated Fixed Rate Notes RM150 million (m) 146,857 150,000 151,917 150,000 Subordinated Fixed Rate Notes RM600 million (m) 591,921 600,000 609,186 600,000 Subordinated Notes – RM1.5 billion (n) 1,567,422 – – – Subordinated Notes – THB3 billion (o) 309,735 – – –

11,417,980 9,675,340 2,141,655 2,130,000

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

26 SUBORDINATED NOTES (CONTINUED)

(a) Subordinated Notes 2006/2011 On 22 November 2006, CIMB Niaga through its Cayman Islands Branch has issued USD200 million Subordinated Notes (“the Notes”) for a period

of 10 years with call option after the fifth year, on 22 November 2011.

The main features of the Notes are as follows:

(i) The Notes are in registered form in the denomination of USD100,000 each and integral multiples of USD1,000 in excess thereof.

(ii) The Notes bear interest at the rate of 7.375% per annum from and including 22 November 2006 to but excluding 22 November 2011 and interest will be payable semi-annually in arrears on 22 May and 22 November of each year, commencing on 22 May 2007. Unless the Notes are previously redeemed, interest from and including 22 November 2011 to but excluding 22 November 2016 will be reset at the US Treasury Rate plus 4.16% per annum and interest will be payable semi-annually in arrears on 22 May and 22 November of each year, commencing on 22 May 2012.

(iii) The indebtedness evidenced by the Notes constitutes unsecured and subordinated obligations of the Issuer and upon any distribution to creditors of the Issuer in a Winding Up Proceedings (as defined in the Terms and Conditions of the Notes), the Notes shall be subordinated in right of payment, to the extent and in the manner provided in the Terms and Conditions of the Notes, to the prior payment in full of all liabilities of the Issuer, except those subordinated liabilities which by their terms rank equally in right of payment with or junior to the Notes. Claims in respect of the Notes will rank pari passu without any preference among themselves, but in priority to the rights and claims of holders of all classes of equity securities of the Issuer, including holders of preference shares, if any.

(iv) The instrument is listed on the Singapore Stock Exchange.

(v) CIMB Niaga may at its option, but subject to the prior consent of Bank Indonesia, redeem the Notes on 22 November 2011 at a price equal to 100 per cent of the principal amount of the Notes together with accrued and unpaid interest to such date.

CIMB Niaga has fully redeemed the Notes on 21 November 2011 upon obtaining approval from Bank Indonesia.

(b) Subordinated Notes 2010/2017 IDR1,380,000 million The Subordinated Notes 2010/2017 IDR1,380,000 million (“the Notes”) were issued by CIMB Niaga on 8 July 2010. The Notes were issued at

scriptless, with term of 7 years from the emission date and with fixed interest rate of 11.30% per annum. The Notes was listed on the Indonesia Stock Exchange on 9 July 2010.

(c) Subordinated Notes 2010/2020 IDR1,600,000 million The Subordinated Notes 2010/2020 IDR1,600,000 million (“the Notes”) were issued by CIMB Niaga on 23 December 2010. The Notes were issued

at scriptless, with term of 10 years from the emission date and with fixed interest rate of 10.85% per annum. The Notes was listed on the Indonesia Stock Exchange on 27 December 2010.

(d) Subordinated Bonds RM1.5 billion The RM1.5 billion 10-year subordinated bonds (“the RM1.5 billion Bonds”) were issued by CIMB Bank on 28 March 2008. The Bonds were issued

at par and are callable with step-up in 2013. The Bonds bear an interest rate of 4.9% per annum payable semi-annually in arrears for the first 5 years, after which interest rate will be reset to 5.9% per annum until maturity date.

CIMB Bank may at its option, subject to the prior approval of BNM, redeem the RM1.5 billion Bonds in part or in whole, on 28 March 2013 at their principal amount.

The RM1.5 billion Bonds qualify as Tier-2 Capital for the purpose of the RWCR computation.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

26 SUBORDINATED NOTES (CONTINUED)

(d) Subordinated Bonds RM1.5 billion (Continued) CIMB Bank has undertaken a fair value hedge on the interest rate risk amounting to RM600 million of the RM1.5 billion Bonds using interest rate

swaps.

The Group

2011RM’000

2010RM’000

Subordinated bonds, at cost 600,000 600,000 Fair value changes arising from fair value hedges 1,821 6,341

601,821 606,341

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2011 was RM14,993,302 (2010: RM20,380,266).

(e) Subordinated Bonds RM1.0 billion The RM1.0 billion subordinated bonds (“the RM1.0 billion Bonds”) were issued by CIMB Bank at par on 7 October 2008 under the Innovative Tier-1

Capital Securities Programme (“T-1 Issue”) which was approved by the Securities Commission on 24 September 2008. The RM1.0 billion Bonds are due on 7 October 2038 callable with step-up on 7 October 2018. The RM1.0 billion Bonds bear an interest rate of 6.7% per annum payable semi-annually in arrears for the first ten years, after which the interest rate will be reset at a rate per annum equal to the 3-month KLIBOR plus 2.98%.

CIMB Bank may at its option, subject to the prior approval of BNM, redeem the RM1.0 billion subordinated bonds in whole but not in part, on 7 October 2018 or any interest payment date thereafter, at their principal amount plus accrued interest.

The RM1.0 billion Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation.

(f) Subordinated Bonds RM1.0 billion The RM1.0 billion subordinated bonds (“the Bonds”) is part of the Non-Innovative Tier 1 Stapled Securities Issuance Programme (“the programme”)

which was approved by the Securities Commission on 17 December 2008. Under the programme, CIMB Bank is allowed to raise Non-Innovative Tier 1 Capital of up to RM4.0 billion in nominal value outstanding at any one time comprising:

(i) Non-Cumulative Perpetual Capital Securities issued by CIMB Bank; and

(ii) Subordinated Notes issued by Commerce Returns Berhad, a wholly-owned subsidiary of CIMB Bank.

The Bonds under the first issuance were issued at par on 26 December 2008 and are due on 26 December 2058, with optional redemption on 26 December 2018 or any distribution payment date thereafter. The Bonds bear an interest rate of 7.2% per annum payable semi-annually in arrears.

Subject to the prior approval of BNM, CIMB Bank shall redeem the RM1.0 billion subordinated bonds in whole but not in part, on 26 December 2018 or any distribution payment date thereafter, at their principal amount plus accrued interest.

The Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation.

CIMB Bank has undertaken fair value hedge on the interest rate risk amounting to RM800 million of the RM1.0 billion Bonds using interest rate swaps.

The Group

2011RM’000

2010RM’000

Subordinated bonds, at cost 800,000 800,000 Fair value changes arising from fair value hedges (9,119) (52,327)

790,881 747,673

The fair value loss of interest rate swaps in these hedge transactions as at 31 December 2011 was RM11,841,284 (2010: RM55,049,856).

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

26 SUBORDINATED NOTES (CONTINUED)

(g) Subordinated Notes (USD50 million) On 17 July 2006, CIMB Thai Bank, a subsidiary of CIMB Bank, issued 50 unit unsecured 10-year subordinated notes (“the USD50 million Notes”).

The USD50 million Notes were issued at a price of USD1 million per unit and are callable with step-up in 2011. The USD50 million Notes bear an interest rate at six-month LIBOR plus 3.5% for the first 5 years payable semi-annually on 17 July and 17 January, after which interest rate will be reset at a rate per annum equal to the six-month LIBOR plus 5.25%.

CIMB Thai Bank may at its option, subject to the prior approval of Bank of Thailand, redeem the USD50 million Notes in whole but not in part, on 17 July 2011 at their principal amount plus accrued interest.

CIMB Thai Bank had fully settled the USD50 million Notes on 17 July 2011.

(h) Subordinated Notes (USD40 million) On 16 February 2007, CIMB Thai Bank, a subsidiary of CIMB Bank, issued 400 unit unsecured 10-year subordinated notes (“the USD40 million

Notes”). The USD40 million Notes were issued at a price of USD100,000 per unit and are callable with step-up in 2012. The USD40 million Notes bear an interest rate at six-month LIBOR plus 3.5% for the first 5 years payable semi-annually on 20 February and 20 August, after which interest rate will be reset at a rate per annum equal to the six-month LIBOR plus 5.25%.

CIMB Thai Bank may at its option, subject to the prior approval of Bank of Thailand, redeem the USD40 million Notes in whole but not in part, on 20 February 2012 at their principal amount plus accrued interest.

The USD40 million Notes will mature on 20 February 2017 and qualify as Tier-2 Capital for the purpose of the RWCR computation.

(i) Subordinated Notes – THB544 million The THB 544 million subordinated notes (“the THB544 million Notes”) represent CIMB Thai Bank’s obligation with regards to the promissory notes

previously issued by few financial institutions before a series of merger. The promissory notes, which are guaranteed by Financial Institutions Development Fund (“FIDF”) have been recalled as FIDF is of the opinion that CIMB Thai Bank has no obligations in respect to the related liabilities. However, CIMB Thai Bank has yet to return the promissory notes to FIDF in order to retain its right to claim compensation from FIDF should CIMB Thai Bank need to undertake any responsibility for any obligations in the future.

(j) Subordinated Sukuk – RM550 million The RM550 million subordinated Sukuk (‘the Sukuk”) is part of the Tier-2 Junior Sukuk programme by the Company’s indirect subsidiary, CIMB

Islamic, which was approved by the Securities Commission on 22 May 2009. Under the programme, CIMB Islamic is allowed to raise Tier-2 capital of up to RM2.0 billion in nominal value outstanding at any one time.

The Sukuk under the first issuance were issued at par on 25 September 2009 and are due on 25 September 2024, with optional redemption on 25 September 2019 or any periodic payment date thereafter. The Sukuk bears a profit rate of 5.85% per annum payable semi-annually in arrears.

On 21 April 2011, additional RM250 million was issued at par and is due on 21 April 2021, with optional redemption on 21 April 2016 or any periodic payment date thereafter. The Sukuk bears a profit rate of 4.20% per annum, payable semi-annually in arrears.

The RM550 million Sukuk qualify as Tier-2 capital for the purpose of the RWCR computation.

CIMB Islamic has undertaken fair value hedge on the interest rate risk of the RM250 million subordinated debts using profit rate swaps.

RM250 million Subordinated debts

The Group

2011RM’000

2010RM’000

Subordinated debts, at cost 250,000 – Fair value changes arising from fair value hedges 7,959 –

257,959 –

The fair value gain of profit rate swaps in these hedge transactions as at 31 December 2011 were RM8,194,538 (2010: RM Nil).

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26 SUBORDINATED NOTES (CONTINUED)

(k) Subordinated Notes RM2 billion CIMB Bank has on 23 December 2010 completed the issuance of RM2.0 billion Subordinated Debt.

The RM2.0 billion Subordinated Debt issuance was issued under the RM5.0 billion Subordinated Debt Programme which was approved by the Securities Commission on 2 March 2009 and 24 September 2010 (for certain variation of terms).

The Subordinated Debt was issued in 2 separate tranches, a RM1.0 billion tranche with a maturity of 10 years callable at the end of year 5 and on each subsequent coupon payment dates thereafter (“10 years tranche”), and another RM1.0 billion tranche with a maturity of 15 years callable at the end of year 10 and on each subsequent coupon payment dates thereafter (“15 years tranche”). Redemption of the Subordinated Debt on the call dates shall be subject to Bank Negara Malaysia’s approval.

The coupon rate for the Subordinated Debt is 4.3% and 4.8% for the 10 years tranche and the 15 years tranche respectively. There is no step up coupon after call dates. Proceeds from the issue will be used for CIMB Bank’s working capital purposes.

The RM2.0 billion subordinated debts qualify as Tier-2 Capital for the purpose of the RWCR computation.

CIMB Bank has undertaken fair value hedge on the interest rate risk of the RM1 billion subordinated debts (maturity of 10 years) and RM800 million of the RM1 billion subordinated debts (maturity of 15 years) using interest rate swaps.

Subordinated debts with maturity of 10 years

The Group

2011RM’000

2010RM’000

Subordinated debts, at cost 1,000,000 1,000,000 Fair value changes arising from fair value hedges 26,237 (586)

1,026,237 999,414

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2011 was RM23,117,414 (2010: fair value loss of RM3,113,966).

Subordinated debts with maturity of 15 years

The Group

2011RM’000

2010RM’000

Subordinated debts, at cost 1,000,000 1,000,000 Fair value changes arising from fair value hedges 64,870 (1,226)

1,064,870 998,774

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2011 was RM55,268,434 (2010: fair value loss of RM8,039,903).

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

26 SUBORDINATED NOTES (CONTINUED)

(l) Subordinated Fixed Rate Notes RM1.38 billion The RM1.38 billion subordinated fixed rate notes (“the RM1.38 billion Notes”) is part of the Subordinated Notes Programme which was approved

by the Securities Commission on 12 June 2009. Under the programme, the Company is allowed to issue subordinated fixed rate notes of up to RM3.0 billion in nominal value.

The RM1.38 billion Notes under the first issuance were issued at par on 30 June 2009 and are due on 30 June 2059, with optional redemption on 30 June 2019 or any periodic payment date thereafter. It bears an interest rate of 7.30% per annum payable semi-annually in arrears for the first ten years, after which the interest rate will be reset at a rate per annum equal to the 6 months KLIBOR + 1% plus original credit spread. The original credit spread is calculated as 7.3% less the 10 year swap rate as per the 11 am BNM fixing rate on 23 June 2009.

(m) Subordinated Fixed Rate Notes RM150 million and RM600 million The RM750 million Cumulative Subordinated Fixed Rate Notes (“the RM750 million Notes”) issued by the Company on 5 April 2010, comprising a

callable 5 year tranche and 10 year tranche, amounting to RM150 million and RM600 million respectively, was part of the Subordinated Notes Programme which was approved by the Securities Commission on 12 June 2009. Under the programme, the Company is allowed to issue subordinated fixed rate notes of up to RM3.0 billion in nominal value.

Both tranches have a maturity of 50 years, with call option for the Issuer to redeem at year 5 and on each subsequent coupon payment date, and year 10 and on each subsequent coupon payment date respectively. The 5 year Tranche pays a semi annual coupon rate of 5.3% per annum whilst the 10 year Tranche pays a coupon of 6.35% per annum. The coupon will be stepped up by 2.0% in the event the Company does not redeem the RM750 million Notes on the respective first call date.

(n) Subordinated Notes RM1.5 billion CIMB Bank has on 8 August 2011 completed the issuance of RM1.5 billion Subordinated Debt.

The RM1.5 billion Subordinated Debt issuance was the second issuance under the RM5.0 billion Subordinated Debt Programme which was approved by the Securities Commission on 2 March 2009 and 24 September 2010 (for certain variation of terms).

The Subordinated Debt was issued in 2 separate tranches, a RM1.35 billion tranche with a maturity of 10 years callable at the end of year 5 and on each subsequent coupon payment dates thereafter (“Tranche 1”), and another RM150 million tranche with a maturity of 15 years callable at the end of year 10 and on each subsequent coupon payment dates thereafter (“Tranche 2”). Redemption of the Subordinated Debt on the call dates shall be subject to Bank Negara Malaysia’s approval.

The coupon rate for the Subordinated Debt is 4.15% and 4.70% for Tranche 1 and Tranche 2 respectively. There is no step up coupon after call dates. Proceeds from the issue will be used for CIMB Bank’s working capital purposes.

The RM1.5 billion Subordinated Debt qualifies as Tier-2 capital for the purpose of the RWCR computation.

CIMB Bank has undertaken fair value hedge on the interest rate risk of the RM1.35 billion and RM150 million subordinated debts using interest rate swaps.

RM1.35 billion Subordinated debts

The Group

2011RM’000

2010RM’000

Subordinated debts, at cost 1,350,000 – Fair value changes arising from fair value hedges 35,936 –

1,385,936 –

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2011 was RM38,756,075 (2010: RM Nil).

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26 SUBORDINATED NOTES (CONTINUED)

(n) Subordinated Notes RM1.5 billion (Continued) RM150 million Subordinated debts

The Group

2011RM’000

2010RM’000

Subordinated debts, at cost 150,000 – Fair value changes arising from fair value hedges 6,257 –

156,257 –

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2011 was RM6,820,237 (2010: RM Nil).

(o) Subordinated Notes – THB3 billion On 14 July 2011, CIMB Thai Bank, a subsidiary of CIMB Bank, issued 3,000,000 units unsecured 10-year subordinated notes (“the THB3 billion

Notes”). The THB 3 billion Notes were issued at a price of THB 1,000 per unit. The THB 3 billion Notes carry constant interest rate of 5.35% per annum payable every 6 months on 14 July and 14 January.

The THB3 billion Notes will mature on 14 July 2021 and qualify as Tier-2 Capital for the purpose of the RWCR computation.

27 SHARE CAPITAL

The Group andthe Company

2011RM’000

2010RM’000

Ordinary shares of RM1.00 each: Authorised: At 1 January 10,000,000 5,000,000 Creation of new authorised share capital during the financial year – 5,000,000

At 31 December 10,000,000 10,000,000

Issued and fully paid shares of RM1.00 each: At 1 January 7,432,775 3,531,766 Issued during the financial year: – exercise of warrants – 101,245 – bonus shares – 3,531,764 – share exchange for acquisition of a subsidiary – 268,000

At 31 December 7,432,775 7,432,775

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28 PREFERENCE SHARES

(a) Non-cumulative guaranteed preference shares

The Group

2011RM’000

2010RM’000

Authorised Redeemable preference shares of USD0.01 each At 1 January/31 December 8 8

Issued and fully paid Redeemable preference shares of USD0.01 each Non-cumulative guaranteed preference shares 741,429 706,879

Non-cumulative guaranteed preference shares, at cost 728,250 728,250 Fair value changes arising from fair value hedges 108,644 99,331 Foreign exchange translations (95,465) (120,702)

741,429 706,879

The USD200 million 6.62% Non-cumulative Guaranteed Preference Shares of USD0.01 each at a premium of USD999.99 per share were issued on 2 November 2005 by SBB Capital Corporation (“SCC”), a wholly-owned subsidiary company of CIMB Bank incorporated in Labuan. The main features of the SCC Preference Shares are as follows:

(i) The SCC Preference Shares are entitled to dividends which are payable in arrears on 2 May and 2 November up to and including 2 November 2015 at a fixed rate of 6.62% per annum.

(ii) On 2 November 2015 (First Optional Redemption Date) and on each dividend date thereafter, SCC may at its option, subject to the prior approval of BNM, redeem the SCC Preference Shares in whole but not in part, at their principal amount plus accrued but unpaid dividends. If the SCC Preference Shares are not called on 2 November 2015, dividends will be reset at a floating rate per annum equal to three-month LIBOR plus 2.53%, payable quarterly on 2 February, 2 May, 2 August and 2 November.

(iii) The SCC Preference Shares will not be convertible into ordinary shares.

(iv) The SCC Preference Shares are guaranteed by CIMB Bank on a subordinated basis. If the SCC Preference Shares have not been redeemed in full on or prior to 2 November 2055, CIMB Bank shall cause the substitution of the SCC Preference Shares with Preference Shares issued by CIMB Bank (Substitute Preference Shares) and the SCC Preference Shares shall be mandatory exchanged for such Substitute Preference Shares having economic terms which are in all material aspects equivalent to those of the SCC Preference Shares.

The SCC Preference Shares were admitted to the Official List of the Singapore Exchange Securities Trading Limited and Labuan International Financial Exchange Inc on 4 November 2005 and 24 November 2005 respectively, and qualify as Tier-1 Capital for the purpose of the RWCR computation, subject to the limit as prescribed in the “Guidelines on Innovative Tier 1 Capital Instruments” issued by Bank Negara Malaysia on 24 December 2004.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

28 PREFERENCE SHARES (CONTINUED)

(b) Redeemable preference shares

The Group

Note2011

RM’0002010

RM’000

Authorised Redeemable preference shares of RM0.01 each (i) 1,000 1,000 Redeemable preference shares of RM0.01 each (ii) 350 350

Issued and fully paid Redeemable preference shares of RM0.01 each At 1 January/31 December (i) 100,000 100,000

Redeemable preference shares of RM0.01 each (ii) At 1 January 53,283 53,283 Redeemed during the financial year (13,696) –

At 31 December 39,587 53,283

(i) On 2 October 2006, a subsidiary, Commerce Agro Ventures Sdn Bhd (“CAgV”), has allotted and issued redeemable preference shares (“RPS”) to an external party amounting to RM100,000,000, comprising RM1,000,000 at nominal value and RM99,000,000 at premium.

The main features of the RPS are as follows:

• The RPS does not carry any fixed dividends.

• Thematurity date of the RPS is either the date corresponding to the 15th anniversary of the issue date or such other date as the Boardmayresolve.

• In the event of winding-up of CAgV or other repayment of capital, the RPS carries the rights to have the surplus assets applied first in payingoff the RPS holders.

• The RPS rank pari passu in all aspects among themselves.

• Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.

(ii) On 20 February 2006, a subsidiary, Commerce-KPF Ventures Sdn Bhd (“CKPF”), has allotted and issued redeemable preference shares (“RPS”) to an external party amounting to RM35,000,000, comprising RM350,000 at nominal value and RM34,650,000 at premium.

The main features of the RPS are as follows:

• The RPS carries a fixed cumulative dividend of 5% per annum.

• Thematurity date of the RPS is either:-

(i) the date corresponding to the 5th anniversary of the issue date; or

(ii) the date corresponding to the 7th anniversary of the issue date; or

(iii) such other date as the Board may resolve.

• Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.

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28 PREFERENCE SHARES (CONTINUED)

(b) Redeemable preference shares (Continued) Subsequently, CKPF has allotted and issued RPS to an external party amounting to RM17,500,000, comprising RM175,000 at nominal value and

RM17,325,000 at premium.

The main features of the RPS are as follows:

• The RPS carries a fixed cumulative dividend of 5% per annum.

• Thematurity date of the RPS is either:-

(i) the date corresponding to the 5th anniversary of the issue date; or

(ii) the date corresponding to the 7th anniversary of the issue date; or

(iii) such other date as the Board may resolve.

• Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.

A subsidiary, Vital Remarks Sdn Bhd (“VRSB”), has allotted and issued RPS to an external party amounting to RM3,133,126.

The main features of the RPS are as follows:

• The RPS carries a fixed cumulative dividend of 8% per annum.

• Thematurity date of the RPS is the date corresponding to the 5th anniversary of the issue date.

• Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.

(c) Perpetual preference shares

The Group

2011RM’000

2010RM’000

Authorised Perpetual preference shares of RM1.00 each 500,000 500,000

Issued and fully paid Perpetual preference shares of RM1.00 each 200,000 200,000

The main features of the perpetual preference shares (“PPS”) are as follows:

(i) The PPS has no right to dividends.

(ii) In the event of liquidation, dissolution or winding-up of CIMB Bank, PCSB as holder of the PPS will be entitled to receive full repayment of the capital paid up on the PPS in priority to any payments to be made to the ordinary shareholders of CIMB Bank.

(iii) The PPS rank pari passu in all aspects among themselves.

(iv) CIMB Bank must not redeem or buy back any portion of the PPS and the PPS will be perpetual except for any capital reduction exercise permitted by the Companies Act, 1965 and as approved by Bank Negara Malaysia.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

29 RESERVES

The Group The Company

Note2011

RM’0002010

RM’0002011

RM’0002010

RM’000

Share premium – ordinary shares 4,192,596 4,192,596 4,192,596 4,192,596 Statutory reserves (a) 4,103,591 3,935,308 – – Regulatory reserve (b) 490,627 117,595 – – Capital reserve 137,104 136,954 55,982 55,982 Exchange fluctuation reserves (c) (172,673) (347,337) – – Revaluation reserve – financial investments available-for-sale (d) 535,762 474,673 – – Retained earnings (e) 8,822,855 6,838,179 1,281,871 1,263,815 Share-based payment reserve (f) 374,332 318,071 – – Other reserves – hedging reserve – net investment hedge (g) 85,482 131,736 – – – EOP reserve-shares purchased pending release (h) (65,388) – – –

18,504,288 15,797,775 5,530,449 5,512,393

(a) The statutory reserves of the Group are maintained in compliance with the provisions of the Banking and Financial Institutions Act, 1989 and include a reserve maintained by a subsidiary in compliance with the Bursa Malaysia Securities Berhad Rules and Regulations. These reserves are not distributable by way of cash dividends.

(b) Regulatory reserve of the Group is maintained as an additional credit risk absorbent to ensure robustness on the loan impairment assessment methodology with the adoption of FRS 139 beginning 1 January 2010.

(c) Exchange translation differences have arisen from translation of net assets of Labuan offshore subsidiaries, foreign branches and foreign subsidiaries. These translation differences are shown under exchange fluctuation reserves.

(d) Movement of the revaluation reserve of financial investments available-for-sale is shown in the statements of comprehensive income.

(e) Pursuant to the Finance Act, 2007 which was gazetted on 28 December 2007, dividends paid, credited or distributed to shareholders are not tax deductible by the Company, but are exempted from tax in the hands of the shareholders (“single tier system”). During the financial year 2009, the Company has fully utilised the credit in the Section 108 balance to distribute dividend payments to its shareholders as allowed by the transitional provision under the Finance Act, 2007. As at 31 December 2011, the Company has sufficient tax exempt account balances to pay tax exempt dividends of up to RM477,522,037 (2010: RM467,522,037) out of its retained earnings.

(f) The Share-based payment reserve arose from the Management Equity Scheme (“MES”) and Equity Ownership Plan (“EOP”), the Group’s share-based compensation benefit.

(g) Hedging reserve arises from net investment hedge activities undertaken by the Group on overseas operations and foreign subsidiaries. The reserve is non-distributable and is reversed to the statement of income when the foreign operations and subsidiaries are partially or fully disposed.

(h) EOP reserve reflects the Group’s shares purchased for EOP under share-based compensation benefits, pending release to its employees.

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30 SHARES HELD UNDER TRUST AND TREASURY SHARES

(a) Shares held under trust

The Group

2011RM’000

2010RM’000

At 1 January/At 31 December 563 563

As an integral part of the CIMBB’s restructuring exercise in 2005, the then existing CIMBB’s ESOS and Employee Equity Scheme (“EES”) ceased to have any value pursuant to the delisting from Bursa Malaysia Securities Berhad. Accordingly, consistent with the fair treatment to all Executive Employees and the spirit of continuity of the scheme in existence, the schemes were modified with terms and conditions remaining and subsequently called the Modified EESOS. For the EES, the remaining options were accelerated and exercised prior to the completion of the CIMBB’s restructuring.

The CIMBB restructuring exercise and the schemes were approved by the shareholders of the Company during the Extraordinary General Meeting held on 8 September 2005. The modified schemes entailed the following:

(i) The setting up of a trust to subscribe for all the remaining CIMBB shares under the unexercisable tranches under the CIMBB ESOS (“ESOS Trust”) prior to the implementation of the CIMBB restructuring. The subscription was facilitated through an accelerated vesting of the unexercisable options. The funding for the subscription for the CIMBB shares by the trustee for both Trusts was provided by the Company by way of a loan.

(ii) Under the CIMBB restructuring exercise, both trustees have opted for new shares of the Company at the ratio of approximately 1.146 of the Company’s shares for one CIMBB share. The Executive Employees or the CEO are entitled to instruct the trustee as to the sale, subject to a minimum market price that is higher than a price to be determined by dividing the existing adjusted exercise price by the ratio of approximately 1.146, plus transaction costs and any income tax liability, if applicable, of such shares of the Company in the manner as previously provided under the CIMBB ESOS.

(iii) The number of the Company’s shares subject to such instruction per annum will be in the same proportion as per the adjusted total outstanding number under the previous CIMBB ESOS multiplied by the ratio approximately 1.146.

(iv) If the Executive Employee or CEO opt to instruct the trustee to transfer or sell in the market, upon such instruction under the Modified EESOS and Modified CEO Option, a proportion of the proceeds received by the Trustee, plus any income tax, if applicable, will be retained by the Trustee and used to offset the Loan and the excess (net of transaction costs) will be payable to the Executive Employee or CEO.

As at 31 December 2011, 258,000 units remain unexercised.

(b) Treasury shares, at cost

The Group and the Company

2011 2010

Units’000 RM’000

Units’000 RM’000

At 1 January 2 21 – – Purchased during the year 1 9 2 21

At 31 December 3 30 2 21

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30 SHARES HELD UNDER TRUST AND TREASURY SHARES (CONTINUED)

(b) Treasury shares, at cost (Continued) The shareholders of the Company, via an ordinary resolution passed at the Annual General Meeting held on 22 April 2011, approved the Company’s

plan and mandate to authorise the Directors of the Company to buy back its own shares up to 10% of existing total paid-up share capital. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the share buyback can be applied in the best interests of the Company and its shareholders.

During the financial year, the Company bought back 1,004 (2010: 2,000) of its issued share capital at an average price of RM8.60 per share (2010: RM10.41 per share), from the open market. As at statements of financial position date, there were 3,004 ordinary shares held as treasury shares (2010: 2,000). The total consideration paid for the share buyback during the financial year, including transaction costs is RM8,631 (2010: RM20,983) and was financed by internally generated funds. Treasury shares have no rights to vote, dividends and participation in other distribution.

31 INTEREST INCOME

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Loans, advances and financing – interest income other than recoveries 10,130,012 8,933,391 32 16,925 – unwinding income ^ 158,602 190,871 – – Money at call and deposits with financial institutions 531,544 359,571 7,417 8,915 Reverse repurchase agreements 107,351 79,410 – – Financial assets held for trading 351,863 298,284 – – Financial assets designated at fair value through profit or loss – 3,442 – – Financial investments available-for-sale 511,145 500,869 – – Financial investments held-to-maturity 705,049 600,357 – – Others 17,878 10,001 541 –

12,513,444 10,976,196 7,990 25,840 Accretion of discounts less amortisation of premiums 168,068 192,662 583 3,200

12,681,512 11,168,858 8,573 29,040

^ Unwinding income is interest income earned on impaired financial assets

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

32 INTEREST ExPENSE

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Deposits and placements of banks and other financial institutions 112,832 55,279 – – Deposits from other customers 4,868,975 3,817,391 – – Repurchase agreements 2,480 569 – – Bonds 968 – – – Subordinated notes 576,782 386,559 146,790 134,931 Loans sold to Cagamas 1,635 8,974 – – Negotiable certificates of deposits 141,756 152,066 – – Other borrowings 186,480 81,518 88,654 55,235 Others 113,353 61,727 – –

6,005,261 4,564,083 235,444 190,166

33 NET NON-INTEREST INCOME

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Net fee and commission income: Commissions 475,792 350,398 – – Fee on loans, advances and financing 357,342 329,266 – – Portfolio management fees 27,305 24,308 – – Service charges and fees 332,060 369,141 – – Corporate advisory fees 133,989 121,355 – – Guarantee fees 66,148 48,624 – – Other fee income 381,719 412,696 – – Placement fees 51,441 53,819 – – Underwriting commission 34,286 143,267 – – Al-Wakalah fee – 29,738 – –

Fee and commission income 1,860,082 1,882,612 – – Fee and commission expense (365,195) (337,047)

Net fee and commission income 1,494,887 1,545,565 – –

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

33 NET NON-INTEREST INCOME (CONTINUED)

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Gross dividend income from: In Malaysia – Subsidiaries – – 2,240,314 1,741,815 – Associates – – 700 1,534 – Financial assets held for trading 31,477 16,857 – – – Financial investments available-for-sale 20,757 21,861 – – – Financial investments held-to-maturity – 77 – – Outside Malaysia – Financial assets held for trading 2,143 980 – – – Financial investments available-for-sale 20,023 20,547 – –

74,400 60,322 2,241,014 1,743,349 Net gain/(loss) arising from financial assets held for trading – realised (315,618) 84,963 – – – unrealised (36,621) (32,876) – –

(352,239) 52,087 – – Net gain/(loss) arising from derivative financial instruments – realised 538,520 (181,881) (7,129) (48,070) – unrealised 349,416 (21,194) 18,386 (13,264)

887,936 (203,075) 11,257 (61,334)

Net loss arising from hedging derivatives (16,284) (60,234) (194) –

Net gain from sale of financial investments available-for-sale 329,432 707,041 – –

Net gain from redemption/maturity of financial investments held-to-maturity 76,864 104,278 – –

Net gain from financial assets designated at fair value through profit or loss – 6,988 – –

Income from assets management and securities services 178,901 175,170 – –

Brokerage income 349,461 372,433 – –

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

33 NET NON-INTEREST INCOME (CONTINUED)

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Other non-interest income: Foreign exchange gain/(loss): – realised (110,977) 81,210 (318) 37,242 – unrealised 312,741 600,917 (9,073) 6,565 Share of gain from recovery of impaired loans 101,220 – – – Gain on deemed disposal/disposal of and interests in subsidiaries 250,000 27,218 – – Rental income 13,069 17,947 2,778 3,135 Gain/(loss) on disposal of property, plant and equipment/assets held for sale 16,194 170,669 – (171) Gain on disposal of leased assets 99 511 – – Gain on disposal of investment properties – – 1,670 – Net gain from insurance business – 38,845 – – Gain/(loss) on revaluation of investment properties 1,842 8,632 – – Other non-operating income 371,044 231,136 6 39 Underwriting surplus before management expenses (Note (a)) 16,809 6,748 – – Loss on disposal of foreclosed properties (19,942) (1,016) – –

952,099 1,182,817 (4,937) 46,810

3,975,457 3,943,392 2,247,140 1,728,825

(a) Underwriting surplus before management expenses is as follows:

The Group

2011RM’000

2010RM’000

Insurance premium earned 67,998 20,633 Net claims incurred (33,274) (689) Net commissions (17,915) (13,196)

16,809 6,748

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

34 OVERHEADS

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Personnel costs – Salaries, allowances and bonus 2,711,023 2,574,840 1,307 1,016 – Pension costs (defined contribution plan) 169,312 187,123 213 240 – Pension costs (defined benefit plans (Note 23(b)) 47,121 25,630 – – – Overtime 33,014 31,931 18 32 – Staff incentives and other staff payments 139,560 128,032 – – – Medical expenses 78,530 76,700 6 4 – Others 339,375 297,307 144 5 Establishment costs – Depreciation of property, plant and equipment 332,205 345,395 2,365 2,136 – Impairment of property, plant and equipment – 824 – – – Depreciation of investment properties – – 110 125 – Amortisation of prepaid lease payments 14,910 60,483 – – – Impairment of investment properties – – – 824 – Rental 301,823 273,309 62 – – Repair and maintenance 215,492 297,264 439 615 – Outsourced services 287,695 253,736 22 – – Security expenses 95,600 91,191 – – – Others 196,428 174,541 502 408 Marketing expenses – Sales commission 13,556 41,824 – – – Advertisement 278,573 261,666 10 109 – Others 64,543 68,459 – – Administration and general expenses – Amortisation of intangible assets 242,179 271,508 – – – Legal and professional fees 171,449 206,164 6,736 5,116 – Stationery 91,070 91,543 2 1,214 – Communication 160,733 145,585 50 52 – Incidental expenses on banking operations 56,487 79,683 – –

– Insurance 150,796 138,896 – – – Others 438,438 489,670 3,129 3,204

6,629,912 6,613,304 15,115 15,100

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34 OVERHEADS (CONTINUED)

The above expenditure includes the following statutory disclosures:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Directors’ remuneration (Note 37) 16,490 18,514 2,589 2,096 Rental of premises 225,427 193,040 21 – Hire of equipment 7,270 8,835 41 – Lease rental 19,631 20,727 – – Auditors’ remuneration Audit

– Statutory audit (PricewaterhouseCoopers Malaysia*) 3,314 4,098 171 171 – Statutory audit (other member firms of PricewaterhouseCoopers International Limited*) 4,898 3,792 – – – Limited review (PricewaterhouseCoopers Malaysia*) 663 963 – – – Limited review (other member firms of PricewaterhouseCoopers International Limited*) 638 300 – – – Other audit related (PricewaterhouseCoopers Malaysia*) 160 640 – – – Other audit related (other member firms of PricewaterhouseCoopers International Limited*) 227 1,411 – – Non-audit

– Non-audit services (PricewaterhouseCoopers Malaysia*) 661 1,179 27 101 – Non-audit services (other member firms of PricewaterhouseCoopers International Limited*) 889 823 – – Property, plant and equipment written off – 200 – –

* PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers International Limited are separate and independent legal entities.

35 ALLOwANCE MADE FOR IMPAIRMENT LOSSES ON LOANS, ADVANCES AND FINANCING

The Group

2011RM’000

2010RM’000

Allowance for bad and doubtful debts on loans and financing Net allowance made during the financial year – Individual impairment allowance 348,005 157,058 – Portfolio impairment allowance 539,855 816,418

Impaired loans and financing – recovered (413,472) (396,983) – written off 12,955 30,683

487,343 607,176

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

36 ALLOwANCE MADE/(wRITTEN BACk) FOR IMPAIRMENT LOSSES

The Group

2011RM’000

2010RM’000

Financial investments available-for-sale – net allowance made/(written back) during the financial year 12,941 23,844

Financial investments held-to-maturity – net allowance (written back)/made during the financial year 785 (587) – recovered (2,509) –

Goodwill – impaired during the financial year – 25,484

Associates/Jointly controlled entity – net allowance made/(written back) during the financial year 2,973 (552)

14,190 48,189

37 DIRECTORS’ REMUNERATION

The Directors of the Company in office during the financial year are as follows:

Executive Directors Dato’ Sri Mohamed Nazir bin Abdul Razak Dato’ Mohd Shukri bin Hussin

Non-Executive Directors Tan Sri Dato’ Md Nor bin Md Yusof Tan Sri Dato’ Seri Haidar bin Mohamed Nor Dato’ Zainal Abidin bin Putih Dato’ Hamzah bin Bakar Datuk Dr Syed Muhamad bin Syed Abdul Kadir Dato’ Robert Cheim Dau Meng Cezar Peralta Consing Hiroyuki Kudo Glenn Muhammad Surya Yusuf Watanan Petersik

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37 DIRECTORS’ REMUNERATION (CONTINUED)

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Executive Directors – Salary and other remuneration 6,285#^ 7,814#^ 1,193 720 – Benefits-in-kind 4,155 5,367 35 42

10,440 13,181 1,228 762

Non-Executive Directors – Fees 1,452 1,513 829 886 – Other remuneration 4,028^ 3,443^ 532 448 – Benefits-in-kind 570 377 – –

6,050 5,333 1,361 1,334

16,490 18,514 2,589 2,096

^ These salary and other remuneration include bonus accruals in relation to the directorship of certain Directors in certain subsidiaries excluding Bank CIMB Niaga. The Directors’ bonus for the financial year 2011 will be paid in tranches, spread over financial year 2012, while for financial year 2010, it will be paid in tranches, spread over financial year 2011. A similar condition is also imposed on the bonus for certain key personnel.

# These salary and other remuneration include RM512,442 (2010: RM419,000) paid by Bank CIMB Niaga in relation to the directorship of Dato’ Mohd Shukri bin Hussin in Bank CIMB Niaga. The amount was paid to CIMB Group Sdn Bhd in which he is employed.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

37 DIRECTORS’ REMUNERATION (CONTINUED)

FeesRM’000

Salary and/or other remuneration

RM’000

Benefits-In-kind

RM’000

The GroupTotal

RM’000Fees

RM’000

Salary and/or other remuneration

RM’000

Benefits-In-kind

RM’000

The Company

TotalRM’000

2011 Executive Directors Dato’ Sri Mohamed Nazir bin Abdul Razak – 4,580 4,120 8,700 – – – – Dato’ Mohd Shukri bin Hussin – 1,705 35 1,740 – 1,193 35 1,228

– 6,285 4,155 10,440 – 1,193 35 1,228 Non-Executive Directors Tan Sri Dato’ Md Nor bin Md Yusof 126 325 – 451 102 320 – 422 Tan Sri Dato’ Seri Haidar bin Mohamed Nor 62 325 122 509 35 11 – 46 Dato’ Zainal Abidin bin Putih 280 482 14 776 126 57 – 183 Dato’ Hamzah bin Bakar 180 292 – 472 126 43 – 169 Datuk Dr Syed Muhamad bin Syed Abdul Kadir 246 410 16 672 126 44 – 170 Dato’ Robert Cheim Dau Meng – 807 233 1,040 – – – – Hiroyuki Kudo – 915 96 1,011 – – – – Cezar Peralta Consing 187 20 – 207 102 16 – 118 Glenn Muhammad Surya Yusuf 257 267 89 613 110 22 – 132 Watanan Petersik 114 185 – 299 102 19 – 121

1,452 4,028 570 6,050 829 532 – 1,361

1,452 10,313 4,725 16,490 829 1,725 35 2,589

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

37 DIRECTORS’ REMUNERATION (CONTINUED)

FeesRM’000

Salary and/or other remuneration

RM’000

Benefits-in-kind

RM’000

The GroupTotal

RM’000Fees

RM’000

Salary and/or other remuneration

RM’000

Benefits-in-kind

RM’000

The Company

TotalRM’000

2010 Executive Directors Dato’ Sri Mohamed Nazir bin Abdul Razak – 6,675 5,325 12,000 – – – – Dato’ Mohd Shukri bin Hussin – 1,139 42 1,181 – 720 42 762

– 7,814 5,367 13,181 – 720 42 762 Non-Executive Directors Tan Sri Dato’ Md Nor bin Md Yusof 126 261 – 387 102 256 – 358 Tan Sri Dato’ Seri Haidar bin Mohamed Nor 210 377 22 609 114 26 – 140 Dato’ Zainal Abidin bin Putih 222 281 – 503 126 49 – 175 Dato’ Hamzah bin Bakar 174 263 – 437 126 36 – 162 Datuk Dr Syed Muhamad bin Syed Abdul Kadir 222 324 6 552 126 36 – 162 Dato’ Robert Cheim Dau Meng – 1,026 214 1,240 – – – – Hiroyuki Kudo – 740 122 862 – – – – Cezar Peralta Consing 186 21 – 207 102 15 – 117 Glenn Muhammad Surya Yusuf 213 66 13 292 95 15 – 110 Watanan Petersik 160 84 – 244 95 15 – 110

1,513 3,443 377 5,333 886 448 – 1,334

1,513 11,257 5,744 18,514 886 1,168 42 2,096

38 TAxATION

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Taxation based on the profit for the financial year: – Malaysian income tax 766,508 356,887 502,409 303,499 – Foreign tax 337,732 266,842 – –

1,104,240 623,729 502,409 303,499 Deferred tax (Note 10) 92,485 361,133 (1,844) 1,971 Over accrual in prior years (67,909) (28,032) (22) (13,175)

1,128,816 956,830 500,543 292,295

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38 TAxATION (CONTINUED)

Reconciliation between tax charge and the Malaysian tax rate:

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Profit before taxation and zakat 5,203,142 4,646,750 2,005,154 1,552,599

Tax calculated at a rate of 25% (2010: 25%) 1,300,785 1,161,688 501,289 388,150 Income not subject to tax (212,528) (415,100) (1,216) (103,737) Effects of different tax rates in other countries (58,834) (69,253) – – Effects of change in tax rates 743 – – – Expenses not deductible for tax purposes 108,679 344,932 492 21,057 Utilisation of previously unrecognised tax losses 57,880 (37,405) – – Over accrual in prior years (67,909) (28,032) (22) (13,175)

Tax charge of current year 1,128,816 956,830 500,543 292,295

39 EARNINGS PER SHARE

(a) Basic earnings per share Basic earnings per share of the Group are calculated by dividing the net profit attributable to equity holders of the parent by the weighted average

number of ordinary shares in issue during the financial year.

2011 2010

Net profit for the financial year (RM’000) 4,030,798 3,500,803 Weighted average number of ordinary shares in issue (‘000) 7,432,772 7,186,034 Basic earnings per share (expressed in sen per share) 54.2 48.7

(b) Diluted earnings per share The Group has no dilution in its earnings per ordinary share in the current and previous financial year as there are no dilutive potential ordinary

shares.

40 DIVIDENDS PER ORDINARY SHARE

Dividends recognised as distributions to owners:

The second interim dividend for the previous financial year were approved by the Board of Directors on 22 February 2011 and paid in the current financial year. This is shown as a deduction from the retained earnings in the statements of changes in equity in the current financial year.

The Directors have declared a single tier interim and special dividend of 12.0 sen per ordinary share on 7,432,771,757 ordinary shares amounting to RM891,932,611 for the financial year ended 31 December 2011. The interim dividend of 12.0 sen per ordinary share was approved by the Board of Directors on 18 August 2011 and paid on 30 September 2011.

The Directors have proposed a second interim single tier dividend of 10.0 sen per ordinary share, on 7,432,771,631 ordinary shares amounting to RM743,277,163 in respect of the financial year ended 31 December 2011, to be paid in 2012. The second interim single tier dividend was approved by the Board of Directors on 27 February 2012.

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40 DIVIDENDS PER ORDINARY SHARE (CONTINUED)

The Directors do not recommend the payment of any final dividend for the financial year ended 31 December 2011.

The Group and the Company

2011 2010

Grossper share

sen

Amountof dividend

net of taxRM’000

Grossper share

sen

Amountof dividend

net of taxRM’000

Interim dividend 8.0 594,622 18.5 653,376 Interim dividend 12.0 891,933 4.6 339,083 Special dividend – – 13.5 999,708

20.0 1,486,555 36.6 1,992,167

41 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

(a) The related parties of, and their relationship with the Company, are as follows:

Related parties Relationship Subsidiaries of the Company as disclosed in Note 12 Subsidiaries Associates of the Company as disclosed in Note 13 Associates Jointly controlled entities as disclosed in Note 14 Jointly controlled entities Key management personnel See below

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group and the Company either directly or indirectly. The key management personnel of the Group and the Company include all the Directors of the Company and employees of the Group who make certain critical decisions in relation to the strategic direction of the Group.

(b) Related party transactions In addition to related party disclosures mentioned elsewhere in the Financial Statements, set out below are other significant related party transactions.

The related party transactions described below were carried out on terms and conditions obtainable in transactions with unrelated parties unless otherwise stated. Interest rates on fixed and short-term deposits were at normal commercial rates.

Subsidiaries Associates key management personnel

2011RM’000

2010RM’000

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Related party transactions The Group Income earned Interest on loans, advances and financing – – – – 42 578 Brokerage income – – – – 42 92

Expenditure incurred Interest on deposits from customers and securities sold under repurchase agreements – – – – 3,766 741

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

41 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

(b) Related party transactions (Continued)

Subsidiaries Associates key management personnel

2011RM’000

2010RM’000

2011RM’000

2010RM’000

2011RM’000

2010RM’000

The Company Income earned Interest on fixed deposits and money market 7,333 8,884 – – – – Accretion on financial investments held-to-maturity 583 3,200 – – – – Interest on savings account 84 31 – – – – Interest on IMTN 5,597 4,295 – – – – Dividend income 2,240,314 1,741,815 700 1,534 – – Rental income 2,773 3,135 – – – –

(c) Related party balances

Subsidiaries Associates key management personnel

2011RM’000

2010RM’000

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Related party balances The Group Amount due from Loans, advances and financing – – – – 20,740 5,338

Amount due to Deposits from customers and securities sold under repurchase agreements – – – – 324,625 279,201 Others – – – – – –

The Company Amount due from Demand deposits, savings and fixed deposits 316,828 529,826 – – – – Commerce International Group RCULS – 34,345 – – – – Redeemable preference shares 29,750 37,750 – – – – Others 26,726 27,677 – – – –

Amount due to Amount due to CIMB Bank Berhad 87,750 65,472 – – – – Amount due to CIMB Islamic Bank Berhad 20,089 20,089 – – – – Amount due to CIMB Investment Bank Berhad – 110 – – – –

Other inter-company balances are unsecured, non-interest bearing and repayable on demand.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

41 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

(d) Key management personnel Key management compensation

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Salaries and other short-term employee benefits 99,963 109,240 15,390 14,096

Share options of the Company (units) 11,008,700 20,373,860 4,760,000 7,760,000 Shares of the Company (units) 3,618,435 – 484,945 –

Included in the above table is the Executive Directors’ compensation which is disclosed in Note 37. The share options and shares granted are on the same terms and conditions as those offered to other employees of the Group and the Company as disclosed in Note 42 to the Financial Statements.

Excluded in the above table are bonus accruals for financial year 2011 and 2010, in relation to the key management personnel in CIMB Niaga, which is subject to approval from the shareholders of CIMB Niaga at their Annual General Meeting.

Loans made to other key management personnel of the Group and the Company are on similar terms and conditions generally available to other employees within the Group. No individual impairment allowance has been required in 2011 and 2010 for the loans, advances and financing made to the key management personnel.

(e) Credit transactions and exposures with connected parties Credit exposures with connected parties as per BNM’s revised “Guidelines on Credit Transactions and Exposures with Connected Parties” which

became effective on 1 January 2008 are as follows:

The Group

2011RM’000

2010RM’000

Outstanding credit exposures with connected parties 11,984,397 14,928,121 Percentage of outstanding credit exposures to connected parties as a proportion of total credit exposures 5.13% 7.22% Percentage of outstanding credit exposures to connected parties which is impaired or in default 0.00% 0.00%

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

42 EMPLOYEE BENEFITS

(a) Management Equity Scheme (“MES” or the “Scheme”) This scheme was initiated as part of a performance linked compensation scheme by a substantial shareholder of the Company, whereby share

options are granted to selected employees of the Group. The scheme was initially launched on 1 March 2004 and the scheme will continue to be in force until 28 February 2012.

The eligibility for participation in the scheme shall be at the discretion of the Nomination and Remuneration Committee of the Company. Entitlements of eligible members of senior management are non-assignable and non-transferable whereby the Nomination and Remuneration Committee of the Company administers the scheme on behalf of the substantial shareholder. The entitlements granted vest in proportions across various exercised periods.

The Scheme previously was not accounted for in the financial statements of the Group and Company as it does not fall within the scope of FRS 2 “Share-based Payment”. The amendments to FRS 2 effective 1 January 2011 clarifies that an entity that receives goods or services in a share-based payment arrangement must account for those goods or services no matter which entity in the group settles the transaction, and no matter whether the transaction is settled in shares or cash. Subsequent to the amendments, the Scheme is now within the scope of FRS 2.

The Group has changed its accounting policy upon adoption of Amendments to FRS 2 on 1 January 2011 retrospectively. As the Group does not have an obligation to settle the transaction with its employees, the Group has accounted for transaction as equity settled in accordance with Amendments to FRS 2. The impact of the change in accounting policy to the prior period presented is disclosed in Note 52.

The weighted average fair value of the entitlements granted, determined using the Binomial Valuation Model was RM6.60 each (2010: RM6.60 each). The significant inputs into the model were as follows:

Valuation assumptions

– Expected volatility 33.9% – Expected dividend yield 1.8% – Expected option life 0.16 years – Weighted average share price at grant date RM9.98 – Weighted average risk-free interest rate 3.10%

The volatility measured at the standard deviation of on daily share price returns was based on statistical analysis of daily prices over the last two years.

The total share-based payment expenses recognised in relation to the Scheme during the current financial year amounted RM23,717,843 (2010: RM20,033,228). The shares are exercisable 2 years from the grant date.

Details of the movement in the number of entitlements outstanding are as follows:

Options (units ’000) 2011 2010

At 1 January 36,674 19,555 Granted – 11,565 Bonus issue – 25,486 Exercised (18,905) (19,481) Forfeited (62) (451)

At 31 December 17,707 36,674

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

42 EMPLOYEE BENEFITS (CONTINUED)

(a) Management Equity Scheme (“MES” or the “Scheme”) (Continued) Share options outstanding at the end of the financial year are as follows:

Grant date Expiry date Options (unit)Exercise price per share

RM

22.3.2007 28.2.2012 10,000,000 3.48 31.5.2007 28.2.2012 5,455,000 3.48 27.3.2008 28.2.2012 4,450,000 3.48 30.1.2009 28.2.2012 780,000 3.48 31.3.2009 28.2.2012 9,116,000 3.48 11.6.2009 28.2.2012 329,000 3.48 6.8.2009 28.2.2012 172,000 3.48 1.10.2009 28.2.2012 400,000 3.48 8.3.2010 28.2.2012 8,944,100 3.48 30.3.2010 28.2.2012 1,351,000 3.48 15.4.2010 28.2.2012 900,140 3.48 26.5.2010 28.2.2012 369,400 1.74

The weighted average share price at the time of exercise was RM8.12 (2010: RM9.46). The weighted average remaining contractual life is 0.16 years (2010: 1.16 years).

The total entitlement granted during the financial year was nil (2010: 11,564,640 units) and number of entitlements that are exercisable at the financial year end is 17,707,137 units (2010: 16,894,140 units).

(b) Equity Ownership Plan (“EOP”) The EOP was introduced on 1 April 2011 by the Group where the Group will grant ordinary shares of the Company to selected employees in the

Group. Under the EOP, earmarked portions of variable remuneration of the selected employees of the Group will be utilised to purchase ordinary shares of the Company from the open market. The purchased shares will be released progressively to the eligible employees at various dates subsequent to the purchase date, subject to continued employment. A subsidiary company will act on behalf of the Group to administer the EOP and to hold the shares in trust up to the pre-determined transfer date. The eligibility of participation in the EOP shall be at the discretion of the Group Compensation Review Committee of the Group.

Upon termination of employment other than retirement, disability or death, any unreleased shares will be disposed at market price and proceeds received will be donated to CIMB Foundation on behalf of the employees. In the event of retirement, disability or death of the eligible employee, the release of shares will be accelerated to the date of termination of employment and the shares will be assigned to the designated beneficiary.

The total share-based payment expenses recognised in statement of income during the financial year amounted to RM59,847,030 (2010: RM Nil).

The weighted average fair value of shares awarded under EOP which were purchased over a period of 10 trading days was RM8.27 per ordinary share, based on observable market price.

Movements in the number of the Company’s ordinary shares awarded are as follows:

2011Total Shares

(units ’000)

At 1 January – Granted 10,545 Released (2,738) Forfeited –

At 31 December 7,807

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

43 CAPITAL COMMITMENTS

Capital expenditure approved by Directors but not provided for in the Financial Statements are as follows:

The Group

2011RM’000

2010RM’000

Capital expenditure: Authorised and contracted for 320,582 320,388 Authorised but not contracted for 1,123,558 1,291,836

1,444,140 1,612,224

Analysed as follows:

The Group

2011RM’000

2010RM’000

Property, plant and equipment 736,947 1,033,084 Subscription for investments 61,736 64,486 Software development 35,885 9,315 Computer software 601,004 468,413 Others 8,568 36,926

1,444,140 1,612,224

44 LEASE COMMITMENTS

The lease commitments are in respect of rented premises and hired equipment, all of which are classified as operating leases. A summary of the non-cancellable long-term commitments is as follows:

The Group

2011RM’000

2010RM’000

Within one year 174,445 130,317 One year to less than five years 777,449 187,322 Five years and more 456,911 150,585

45 SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined the Group Management Committee as its chief operating decision-maker.

Segment information is presented in respect of the Group’s business segment and geographical segment.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

45 SEGMENT REPORTING (CONTINUED)

The business segment results are prepared based on the Group’s internal management reporting, which reflect the organisation’s management reporting structure.

(a) Business segment reporting Definition of segments

For management purposes, the Group is organised into six major operating divisions. The divisions form the basis on which the Group reports its primary segment information.

Consumer Banking Consumer Banking comprises of Retail Banking, Business Banking, Direct Banking and Cards and CIMB Express.

Retail Banking focuses on introducing innovative products and services to individual customers. It offers products such as credit facilities (residential mortgages, personal loans, shares financing and hire purchase financing), private client services, remittance services and deposit acceptance.

Business Banking is responsible for the development of products and services for customer segments comprising micro-enterprises, small and medium-scale enterprises (SMEs) and mid-sized corporation, as well as the management of business loan portfolios of these customer segments.

Direct Banking and Cards focuses on mass affluent customers and credit card business while CIMB Express caters to lower income customers offering product such as microcredit loan.

Corporate and Investment Banking Corporate and Investment Banking comprise investment banking, corporate finance, corporate banking, regional banking and transactional services,

equity capital markets, retail and institutional equities, equity derivatives and equity investment and trading.

Investment Banking and Corporate Finance offers financial advisory services to corporations, advising issuance of equity and equity-linked products, debt restructuring, mergers and acquisitions, initial public offerings, secondary offerings and general corporate advisory. Corporate Banking provides a broad spectrum of financial and Ringgit lending services for domestic and multinational corporations as well as institutional and public sector clients. Regional banking oversees the activities of the Group’s overseas branches in London, Singapore and Hong Kong and provides conventional and customised financial packages in order to meet customers’ needs, with products including non-Ringgit corporate lending, nominee services and cash management services.

Equity Capital Markets provides services including acting as underwriter, global co-ordinator, book runner or lead manager for equity and equity-linked transactions, originating, structuring, pricing and executing equity and equity-linked issues and executing programme trades, block trades and market making. Equity Derivatives Group develops and issues new equity derivatives instruments such as structured warrants and over-the-counter options to provide investors with alternative investment avenues. Equity Investment and Trading is the Group’s Proprietary Equity Trading Unit. Retail and Institutional Equities provide stock broking services to retail and corporate clients.

Treasury and Investment Treasury focuses on treasury activities and services which include foreign exchange, money market, derivatives and trading of capital market

instruments. It also invests the Group’s proprietary capital.

Asset Management and Insurance Asset Management comprises wholesale fund management, unit trust, private equity and venture capital activities. It includes the Group’s life and

takaful activities.

Foreign Banking Operations Foreign Banking Operations comprise of PT Bank CIMB Niaga Tbk, CIMB Thai Bank Public Company Limited, CIMB Bank PLC and Bank of Yingkou

Co Ltd, which are involved in the provision in the commercial banking and related services.

Support and others Support services comprise all middle and back-office processes, cost centres and non-profit generating divisions of companies in the Group. Other

business segments in the Group include investment holding, property management and other related services, whose results are not material to the Group.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

45 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

2011

ConsumerBankingRM’000

Corporateand

InvestmentBankingRM’000

Treasuryand

InvestmentRM’000

AssetManagement

andInsurance

RM’000

ForeignBanking

OperationsRM’000

Supportand Others

RM’000Total

RM’000

Group Net interest income – external income/(expense) 2,537,928 1,223,026 (121,095) 12,739 3,218,236 (194,583) 6,676,251 – inter-segment income 62,386 (531,475) 492,386 (11) (19) (23,267) –

2,600,314 691,551 371,291 12,728 3,218,217 (217,850) 6,676,251 Non-interest income 821,693 868,429 923,645 262,928 1,091,759 7,003 3,975,457 Income from Islamic banking operations 643,269 158,287 585,365 – 80,600 2,800 1,470,321

4,065,276 1,718,267 1,880,301 275,656 4,390,576 (208,047) 12,122,029 Overheads of which: (2,646,782) (891,501) (522,476) (205,169) (2,341,090) (22,894) (6,629,912) – Depreciation of property, plant and equipment (142,064) (35,178) (12,633) (9,601) (117,535) (15,194) (332,205) – Amortisation of prepaid lease payments – – – – (14,910) – (14,910) – Amortisation of intangible assets (112,489) (13,620) (8,040) (2,487) (101,895) (3,648) (242,179)

Profit/(loss) before allowances 1,418,494 826,766 1,357,825 70,487 2,049,486 (230,941) 5,492,117 Allowance (made)/written back for impairment losses on loans, advances and financing (9,102) (38,088) (5,803) – (434,306) (44) (487,343) Allowance written back/(made) for losses on other receivables (896) (2,501) 18,227 (1,072) (17,926) (4,740) (8,908) Allowance (made)/written back for commitments and contingencies (1,518) 20,336 – – 36,617 – 55,435 Recoveries from investment management and securities services – – 15,000 – – – 15,000 Allowance written back/(made) for other impairment losses – 473 (13,648) – (3,504) 2,489 (14,190)

Segment results 1,406,978 806,986 1,371,601 69,415 1,630,367 (233,236) 5,052,111 Share of results of jointly controlled entity 9,359 – 8,898 (1,264) – – 16,993 Share of results of associates – – 22,225 23,413 88,400 – 134,038

Profit/(loss) before taxation 1,416,337 806,986 1,402,724 91,564 1,718,767 (233,236) 5,203,142 Taxation (1,128,816)

Profit after taxation 4,074,326

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

45 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

2011

ConsumerBankingRM’000

Corporateand

InvestmentBankingRM’000

Treasuryand

InvestmentRM’000

AssetManagement

andInsurance

RM’000

ForeignBanking

OperationsRM’000

Supportand Others

RM’000Total

RM’000

Group Segment assets 82,866,256 58,707,487 75,903,872 1,316,165 71,749,460 1,044,254 291,587,494 Investment in associates and jointly controlled entities 149,208 – 229,097 511,517 462,941 5,103 1,357,866

83,015,464 58,707,487 76,132,969 1,827,682 72,212,401 1,049,357 292,945,360 Unallocated assets – – – – – – 7,257,347

Total assets 83,015,464 58,707,487 76,132,969 1,827,682 72,212,401 1,049,357 300,202,707

Segment liabilities 78,640,765 26,236,283 91,512,652 598,054 66,008,808 6,597,989 269,594,551 Unallocated liabilities – – – – – – 3,744,996

Total liabilities 78,640,765 26,236,283 91,512,652 598,054 66,008,808 6,597,989 273,339,547

Other segment items Incurred capital expenditure 344,373 73,555 24,972 23,211 250,267 47,169 763,547 Investment in jointly controlled entities 149,208 – 36,157 3,114 – – 188,479 Investment in associates – – 192,940 508,403 462,941 5,103 1,169,387

Basis of pricing for inter-segment transfers: Intersegmental charges are computed principally based on the interest-bearing assets and liabilities of each business segment with appropriate rates

applied.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

45 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

2010

ConsumerBankingRM’000

Corporateand

InvestmentBankingRM’000

Treasuryand

InvestmentRM’000

AssetManagement

andInsurance

RM’000

ForeignBanking

OperationsRM’000

Supportand Others

RM’000Total

RM’000

Group Net interest income – external income/(expense) 2,601,577 1,212,813 (132,066) 17,192 3,055,506 (150,247) 6,604,775 – inter-segment income (150,417) (505,062) 675,879 (6) (7) (20,387) –

2,451,160 707,751 543,813 17,186 3,055,499 (170,634) 6,604,775 Non-interest income 774,796 971,741 720,787 297,392 1,119,182 59,494 3,943,392 Income from Islamic banking operations 552,332 220,930 493,944 – 62,091 739 1,330,036

3,778,288 1,900,422 1,758,544 314,578 4,236,772 (110,401) 11,878,203 Overheads of which: (2,735,067) (952,755) (553,494) (225,597) (2,078,432) (67,959) (6,613,304) – Depreciation of property, plant and equipment (145,779) (39,544) (13,192) (9,907) (123,907) (13,066) (345,395) – Amortisation of prepaid lease payments – – – – (60,483) – (60,483) – Amortisation of intangible assets (94,312) (16,151) (7,740) (4,568) (143,463) (5,274) (271,508)

Profit/(loss) before allowances 1,043,221 947,667 1,205,050 88,981 2,158,340 (178,360) 5,264,899 Allowance (made)/written back for impairment losses on loans, advances and financing (250,963) 226,871 (35,051) – (546,679) (1,354) (607,176) Allowance written back/(made) for losses on other receivables – 2,731 (16,330) (813) 6,642 (315) (8,085) Allowance (made)/written back for commitments and contingencies (12,601) – – – (8,567) 268 (20,900) Losses from investment management and securities services – – (50,000) – – – (50,000) Allowance written back/(made) for other impairment losses – 835 (46,630) – (3,513) 1,119 (48,189)

Segment results 779,657 1,178,104 1,057,039 88,168 1,606,223 (178,642) 4,530,549 Share of results of jointly controlled entity 10,449 – 299 (1,200) – – 9,548 Share of results of associates – – 31,222 – 54,586 812 86,620

Profit/(loss) before taxation 790,106 1,178,104 1,088,560 86,968 1,660,809 (177,830) 4,626,717 Taxation (956,830)

Profit after taxation 3,669,887

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

45 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

2010

ConsumerBankingRM’000

Corporateand

InvestmentBankingRM’000

Treasuryand

InvestmentRM’000

AssetManagement

andInsurance

RM’000

ForeignBanking

OperationsRM’000

Supportand Others

RM’000Total

RM’000

Group Segment assets 78,502,660 52,191,855 65,351,610 3,266,558 61,536,648 734,936 261,584,267 Investment in associates and jointly controlled entities 139,849 – 54,212 131,657 349,472 5,103 680,293

78,642,509 52,191,855 65,405,822 3,398,215 61,886,120 740,039 262,264,560 Unallocated assets – – – – – – 7,100,684

Total assets 78,642,509 52,191,855 65,405,822 3,398,215 61,886,120 740,039 269,365,244

Segment liabilities 70,667,886 20,313,514 86,435,350 2,429,057 57,713,009 3,550,089 241,108,905 Unallocated liabilities – – – – – – 3,953,140

Total liabilities 70,667,886 20,313,514 86,435,350 2,429,057 57,713,009 3,550,089 245,062,045

Other segment items Incurred capital expenditure 238,637 66,992 23,644 37,267 123,797 26,305 516,642 Investment in jointly controlled entities 139,849 – – 31,637 – – 171,486 Investment in associates – – 54,212 100,020 349,472 5,103 508,807

Basis of pricing for inter-segment transfers: Intersegmental charges are computed principally based on the interest-bearing assets and liabilities of each business segment with appropriate rates

applied.

(b) Geographical segment reporting The Group’s business segments are managed on a worldwide basis and they operate mainly in four main geographical areas:

– Malaysia, the home country of the Group, which includes all the areas of operations in the primary business segments.

– Indonesia, the areas of operation in this country include all the primary business segments of a subsidiary bank, PT Bank CIMB Niaga Tbk.

– Thailand, the areas of operation in this country include all the primary business segments of a subsidiary bank, CIMB Thai Bank.

– Other countries include branch and subsidiary operations in Singapore, United Kingdom, United States of America, Cambodia and Hong Kong. The overseas operations involved mainly in corporate lending and borrowing, and stockbroking activities. With the exception of Malaysia, Indonesia and Thailand, no other individual country contributed more than 10% of the consolidated net interest income or assets.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

45 SEGMENT REPORTING (CONTINUED)

(b) Geographical segment reporting (Continued)

Net interestincomeRM’000

Total noncurrent assets

RM’000

Totalassets

RM’000

Totalliabilities

RM’000

Capitalexpenditure

RM’000

The Group 2011 Malaysia 3,218,678 15,882,470 204,222,063 186,618,702 461,588 Indonesia 2,677,924 585,032 58,709,549 52,117,726 155,977 Thailand 547,377 459,665 17,105,661 15,781,156 79,977 Other countries 232,272 1,074,035 20,165,434 18,821,963 66,005

6,676,251 18,001,202 300,202,707 273,339,547 763,547

2010 Malaysia 3,410,112 11,959,885 186,090,488 169,049,462 368,601 Indonesia 2,544,348 664,444 49,383,809 44,606,090 69,727 Thailand 514,544 600,902 14,721,092 13,494,510 42,683 Other countries 135,771 332,287 19,169,855 17,911,983 35,631

6,604,775 13,557,518 269,365,244 245,062,045 516,642

46 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) Loss of control in insurance subsidiaries CIMB Aviva Assurance Berhad (“CAAB”) and CIMB Aviva Takaful Berhad (“CATB”), formerly indirect subsidiaries of the Group, have ceased to be

subsidiaries of the Group due to realignment in the composition of CAAB and CATB’s Board of Directors effective 1 January 2011. There was no change in the Group’s existing 51% equity interest held in the two entities. The Group has lost control over CAAB and CATB and now has significant influence over the two entities. Therefore, CAAB and CATB have been accounted for as investment in associates of the Group. The financial results of CAAB and CATB are equity accounted for in the financial statements of the Group for the financial year ended 31 December 2011.

The loss of control is deemed partial disposal of subsidiaries and the investment retained in CAAB and CATB is recognised at fair value in accordance with revised FRS 127 – “Consolidated and separated Financial Statements”, resulting in a gain of RM250 million recognised in the statement of income of the Group.

(b) Acquisition of additional equity stake in CIMB Capital Advisors Partner Asia Sdn Bhd (“CAPA”) (formerly known as CIMB Standard Strategic Asset Advisor Sdn Bhd)

On 10 May 2011, CIMB Strategic Assets Sdn Bhd (“CIMB SA”), a wholly-owned subsidiary of the Group, had acquired 200,000 ordinary shares of CAPA for a cash consideration of RM1,522,299, representing the remaining 40% of issued share capital not owned by CIMB SA. As a result, CAPA became a wholly-owned subsidiary of CIMB SA and indirect wholly-owned subsidiary of the Group.

(c) Potential acquisition of a stake in Bank of Commerce in the Philippines On 6 October 2011, the Group announced that it is in an early stage of discussion with San Miguel Corporation for a possible acquisition of a

stake in Bank of Commerce in the Philippines.

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46 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

(d) Rights issue on ordinary shares by CIMB Niaga On 15 November 2010, CIMB Niaga announced a 1-for-20 rights issue of up to 1,196,743,183 new CIMB Niaga shares at IDR1,250 each. The

rights issue was completed and the new CIMB Niaga shares were listed on 12 January 2011.

(e) Issuance of Subordinated Sukuk On 21 April 2011, CIMB Islamic, an indirect subsidiary of the Company, had issued Subordinated Sukuk (the “Sukuk”) as part of the Tier-2 Junior

Sukuk programme which was approved by the Securities Commission on 22 May 2009. Under the programme, CIMB Islamic is allowed to raise Tier-2 capital of up to RM2.0 billion in nominal value outstanding at any one time. The Sukuk qualifies as Tier-2 capital for the purpose of the RWCR computation.

(f) Issuance of additional new ordinary shares by CIMB Islamic On 30 May 2011, CIMB Islamic had issued 250 million additional new ordinary shares of RM1 each (at par value) amounting to RM250 million,

which were fully subscribed by CIMB Bank.

(g) Settlement of bonds and term loans CIMB Bank (L) Limited, a subsidiary of CIMB Bank had fully settled its USD140 million bonds and USD300 million term loan on 15 April 2011 and

22 June 2011 respectively.

(h) Issuance of RM1.5 billion Subordinated Debt CIMB Bank has on 8 August 2011 completed the issuance of RM1.5 billion Subordinated Debt.

The RM1.5 billion Subordinated Debt issuance was the second issuance under the RM5.0 billion Subordinated Debt Progromme which was approved by the Securities Commission on 2 March 2009 and 24 September 2010.

The Subordinated Debt was issued in 2 separate tranches, a RM1.35 billion tranches with a maturity of 10 years callable at the end of year 5 and on each subsequent coupon payment dates thereafter (“Tranches 2”). Redemption of the Subordinated Debt on the call dates shall be subject to Bank Negara Malaysia’s approval.

(i) Issuance of THB3 billion subordinated notes CIMB Thai Bank, a subsidiary of CIMB Bank had fully settled its USD50 million subordinated notes on 17 July 2011. CIMB Thai Bank had on

14 July 2011 issued 3,000,000 units unsecured 10-year subordinated notes (the “THB3 billion Notes”). The THB3 billion Notes were issued at a price of THB1,000 per unit. The THB3 billion Notes carry constant interest rate of 5.35% per annum payable every 6 months on 14 July and 14 January. The THB3 billion Notes will mature on 14 July 2021 and qualify as Tier-2 Capital for the purpose of the RWCR computation.

(j) Settlement of USD200 million subordinated notes On 19 October 2011, CIMB Niaga announced its intention to call the USD200 million subordinated notes, which is callable on 22 November 2011.

The USD200 million subordinated notes was settled on 21 November 2011.

(k) Issuance of IDR1,500,000 million bonds with fixed interest rates On 15 December 2011, CIMB Niaga issued a IDR1,500,000 million bonds with fixed interest rates. The bonds are divided into Series A Bond and

Series B Bond. Series A Bond is IDR180,000 million bond with a tenor of 3 years which will mature on 23 December 2014. It bears fixed interest rate of 7.375% per annum. Series B Bond is IDR1,320,000 million bond with a tenor of 5 years which will mature on 23 December 2016. It bears fixed interest rate of 8.30% per annum.

(l) Disposal of impaired loans On 30 December 2011, CIMB Bank Thai disposed unsecured retail impaired loans portfolio to Sathorn Asset Management Company Limited

(“STAMC”), an indirect subsidiary of CIMB Group for a total cash consideration of THB200 million (approximately RM20,144,000 based on exchange rate of RM10.072:THB100 as at 30 December 2011).

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

46 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

(m) Joint venture in Sri Lanka On 4 August 2011, CIMB Securities International Pte. Ltd. (“CIMBSI”), an indirect wholly-owned subsidiary of the Company, has entered into a Joint

Venture and Shareholders’ Agreement with its partners, Mr. Alex Lovell and Ms. Reshani Dangalia, to establish an investment banking advisory joint venture in Sri Lanka (“Joint Venture”). Pursuant to the Agreement, the shareholders have committed up to USD2 million for the venture and it will be a subsidiary of CIMBSI upon its incorporation. The Joint Venture company shall provide investment banking services such as corporate, equity and debt capital market and general advisory on mergers and acquisitions, initial public offerings and secondary offerings, primary and dual listings, privatisations, corporate restructuring and capital management, as well as such other related businesses that the Joint Venture company may choose to undertake in the future.

47 SIGNIFICANT EVENTS SUBSEqUENT TO THE FINANCIAL YEAR END

(a) Potential acquisition of a stake in Bank of Commerce in the Philippines On 12 January 2012, the Group announced that discussions on the possible acquisition of a stake in Bank of Commerce in the Philippines is still

on-going and wishes to conclude the negotiations with San Miguel Corporation by first quarter 2012.

(b) Investment in Siam Industrial Credit Public Company Limited (“SSEC”) On 15 February 2012, CIMB Securities International Pte. Ltd. (“CSI”), an indirect wholly-owned subsidiary of the Company, has completed a

conditional Share Sale and Purchase Agreement (“SSPA”) with Siam Industrial Credit Public Company Limited (“SICCO”) for the Proposed Acquisition of 70.06% interest in SICCO Securities Public Company Limited (“SSEC”) at a total cash consideration of THB767,907,519 (equivalent to RM78,426,395) or a cash consideration of THB1.72 per ordinary share of SSEC. Under the laws of Thailand, CSI is required to conduct a mandatory tender offer to acquire all the remaining shares in SSEC not owned by CSI from other shareholders of SSEC, subject to the fulfilment of conditions precedent under the SSPA and upon completion of the Proposed Acquisition.

The mandatory tender offer is expected to be completed by April 2012.

The fair value of the assets and liabilities arising from the acquisition are as follows:

Fair valueRM’000

Cash and cash equivalents 20,087 Deposits and placements with banks and other financial institution 252 Financial assets at fair value through profit or loss 6,409 Loans, advances and financing 96,653 Other assets 16,558 Other long term investments carried at cost 827 Property, plant and equipment 4,652 Trade and other payables (50,079) Current tax liabilities (621)

Net assets acquired 94,738 Less: Non-controlling interest measured at non-controlling interest’s proportionate share of SICCO’s net identifiable assets (16,996) Add: Provisional goodwill 13,331

Purchase consideration satisfied via cash 91,073 Less: Cash and cash equivalents acquired (20,339)

Cash inflow on acquisition 70,734

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

47 SIGNIFICANT EVENTS SUBSEqUENT TO THE FINANCIAL YEAR END (CONTINUED)

(b) Investment in Siam Industrial Credit Public Company Limited (“SSEC”) (Continued) The fair value of identifiable assets acquired and liabilities assumed, proportionate share of non-controlling interests, and the residual goodwill has

been provisionally accounted for as the accounting for the acquisition is still incomplete at the time the financial statements have been authorised for issue.

Acquisition related costs

Acquisition related costs amounting to RM346,480 have been incurred for financial year ended 31 December 2011. These costs are included in administration and general expenses in the consolidated statements of income.

Acquired receivables

The fair value of receivables acquired amounted to RM107,360,000 comprising of balances in loans, advances and financing of RM96,411,720 and balances in other assets of RM10,948,280. The gross contractual amount for loans, advances and financing due is RM103,387,680 of which RM6,975,960 is expected to be uncollectible.

(c) Disposal of 6.8% stake in The South East Asian Strategic Assets Fund LP On 21 February 2012, CIMB Bank entered into a sale and purchase agreement with a third party for the disposal of 6.8% stake in The South East

Asian Strategic Assets Fund LP.

(d) Joint venture in Sri Lanka On 28 February 2012, CIMB Securities International Pte Ltd (“CIMBSI”) has entered into a Deed of Accession to the Joint Venture and Shareholders’

Agreement to facilitate the entry of Vista Knowledge Pte Ltd (“Vista Knowledge”), a wholly-owned subsidiary of Genting Berhad, as a new shareholder of the Joint Venture company. The new shareholding structure following Vista Knowlege’s entry is; CIMB (45%), Mr. Alex Lovell (20%), Vista Knowledge (20%) and Ms Reshani Dangalla (15%).

(e) Acquisition proposal on Royal Bank of Scotland (“RBS”) On 1 March 2012, CIMB Group Sdn Bhd, a wholly-owned subsidiary of the Group, has signed a memorandum of understanding (the “MOU”) for

the proposed acquisition of certain of the cash equities, equity capital markets and corporate finance businesses of The Royal Bank of Scotland in Asia Pacific. The MOU provides for the parties to negotiate exclusively with each other and finalise the scope and terms of a sale and purchase agreement.

48 CAPITAL ADEqUACY

The key driving principles of the Group’s capital management policies are to diversify its sources of capital to allocate capital efficiently, and achieve and maintain an optimal and efficient capital structure of the Group, with the objective of balancing the need to meet the requirements of all key constituencies, including regulators, shareholders and rating agencies.

The capital management process is centrally supervised by the Group Executive Committee (EXCO), Group Risk Committee (GRC) and Branch Risk Committee (BRC) who periodically assess and review of the capital requirements and source of capital across the Group, taking into account all on-going and future activities that consume or create capital, and ensuring that the minimum target for capital adequacy is met. Available capital is allocated across competing demands, guided by the predetermined policies, and to ensure regulatory compliance. Monthly updates on capital position of the Group are also provided to the Board of Directors.

The capital adequacy ratios of the banking subsidiaries of the Group are computed as follows:

The capital adequacy ratios of CIMB Bank Group (other than CIMB Thai Bank and CIMB Bank PLC), CIMB Bank and CIMB Islamic Bank are computed in accordance with Bank Negara Malaysia (“BNM”) Guidelines on Risk Weight Capital Adequacy Framework: Internal Rating-Based approach (IRB approach) for Credit Risk, where Advanced Internal Rating-Based (AIRB) is used for retail exposure and Foundation IRB for Non-Retail exposure while Operational Risk is based on Basic Indicator Approach. Market Risk remained unchanged under Standardised Approach.

With effect from November 2011, the capital adequacy ratios of CIMB Investment Bank are computed in accordance with BNM Guidelines on Risk Weight Capital Adequacy Framework: Standardised approach (SA approach) for Credit Risk and Basic Indicator Approach for Operational Risk. Market Risk remained unchanged under Standardised Approach. In 2010, IRB approach is adopted to compute Credit Risk.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

48 CAPITAL ADEqUACY (CONTINUED)

Subsequent to the transition to Basel II IRB in 2010, and following a refinement in the interpretation of the guideline, management is of the opinion that it is impractical to apply IRB Approach due to lack of IRB assets in CIMB Investment Bank. In November 2011, CIMB Investment Bank has adopted the SA approach for the Group to better reflect the nature of the underlying business activities. The change does not in any way affect how business is conducted at CIMB Investment Bank and will in fact maintain the efficient employment of capital at CIMB Investment Bank.

The capital adequacy ratios of Bank CIMB Niaga and CIMB Thai Bank remained unchanged based on guidelines issued by Bank of Indonesia and Bank of Thailand respectively. Credit Risk and Market Risk is based on Standardised Approach (SA) while Operational Risk is based on Basic Indicator Approach. The capital adequacy ratio of CIMB Bank PLC is completed based on National Bank of Cambodia’s requirements.

Capital Structure and Adequacy The table below sets out the summary of the sources of capital and the capital adequacy ratios of the Group as at 31 December 2011. The banking

subsidiaries issue various capital instruments pursuant to the respective regulatory guidelines, including tier-2 Subordinated Debt, innovative and non-innovative tier-1 hybrid securities that qualify as capital pursuant to the RWCAF and Capital Adequacy Framework for Islamic Banks (CAFIB) issued by BNM.

(a) The total capital base and capital adequacy ratios of CIMB Bank (including the operations of CIMB Bank (L) Limited), CIMB Bank Group, CIMB Investment Bank, CIMB Islamic Bank, Bank CIMB Niaga, CIMB Thai Bank and CIMB Bank PLC for the financial year ended 31 December 2011 are as follows. The individual entities within the Group and the Group complied with all externally imposed capital requirements to which they are subject to.

CIMB BankRM’000

CIMBIslamic

BankRM’000

CIMBThai Bank

RM’000

CIMBBank Group

RM’000

CIMBInvestment

Bank GroupRM’000

Bank CIMBNiaga

RM’000

CIMB BankPLC*

RM’000

31 December 2011 Before deducting proposed dividends Core capital ratio 15.26% 10.44% 7.65% 11.97% 21.02% 10.17% N/A Risk-weighted capital ratio 17.59% 14.42% 13.00% 16.87% 21.04% 13.09% 56.33%

After deducting proposed dividends Core capital ratio 14.45%+ 10.44% 7.65% 11.33%+ 16.51%@ 10.17% N/A Risk-weighted capital ratio 16.78%+ 14.42% 13.00% 16.24%+ 16.53%@ 13.09% 56.33%

The breakdown of risk-weighted assets (“RWA”) by each major risk category are as follows:

Credit risk 83,785,262 14,677,578 13,168,819 109,351,226 1,081,967 46,387,969 184,352 Market risk 8,105,302 346,673 339,155 8,785,131 307,315 611,862 – Operational risk 9,949,736 1,402,324 – 12,620,584 807,424 5,117,613 – Large exposure risk 400,148 – 862,316 400,148 – – –

102,240,448 16,426,575 14,370,290 131,157,089 2,196,706 52,117,444 184,352

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

48 CAPITAL ADEqUACY (CONTINUED)

(b) Components of Tier I and Tier II capital for the financial year ended 31 December 2011 are as follows:

CIMB BankRM’000

CIMBIslamic

BankRM’000

CIMBThai Bank

RM’000

CIMBBank Group

RM’000

CIMBInvestment

Bank GroupRM’000

Bank CIMBNiaga

RM’000

CIMB BankPLC*

RM’000

31 December 2011 Tier I capital Paid-up capital 3,764,469 1,000,000 809,961 3,764,469 100,000 561,888 117,549 Perpetual preference shares 200,000 70,000 – 200,000 – – – Non-innovative Tier I Capital 1,000,000 – – 1,000,000 – – – Innovative Tier I Capital 1,635,400 – – 1,635,400 – – – Share premium 5,033,633 – 147,266 5,033,633 – 2,823,236 – Other reserves 7,642,406 791,169 141,948 8,783,032 402,127 1,948,607 (12,130) Non-controlling interests – – – 266,211 – – – Less: Investment in subsidiaries and holding of other banking institutions’ capital – – – – – (35,245) – Deferred tax assets (118,506) (10,791) – (89,327) (40,460) – – Intangible assets – – – – – – (2,916) Goodwill (3,555,075) (136,000) – (4,899,904) – – –

Total Tier I capital 15,602,327 1,714,378 1,099,175 15,693,514 461,667 5,298,486 102,503 Tier II capital Redeemable preference shares 29,740 – – 29,740 10 – – Subordinated notes 5,000,000 550,000 439,728 5,813,057 – – – Subordinated loans – – – – – 1,051,495 – Revaluation reserve – – 36,571 – – – – Regulatory reserve 431,514 59,113 – 490,627 – – – Portfolio impairment allowance √ 188,389 64,585 41,044 397,291 623 464,878 1,346 Surplus of total eligible provision over expected loss under the IRB approach 359,190 (18,719) – 255,860 – – – Others – – 251,674 – – 40,010 –

Total eligible Tier II capital 6,008,833 654,979 769,017 6,986,575 633 1,556,383 1,346 Less: Investment in subsidiaries and holding of other banking institutions’ capital (3,249,823) – – (177,125) (50) (35,245) – Securitisation exposures subject to deductions** (70,116) – – (70,116) – – – Investment in associates (306,061) – – (306,061) – – –

Total Eligible Tier II capital 2,382,833 654,979 769,017 6,433,273 583 1,521,138 1,346

Total Capital base 17,985,160 2,369,357 1,868,192 22,126,787 462,250 6,819,624 103,849 Less: Proposed dividends (827,000) – – (827,000) (99,034) – –

17,158,160 2,369,357 1,868,192 21,299,787 363,216 6,819,624 103,849

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

48 CAPITAL ADEqUACY (CONTINUED)

(b) Components of Tier I and Tier II capital for the financial year ended 31 December 2011 are as follows (Continued):

@ Interim dividend for financial year ended 31 December 2011 to be paid in March 2012

+ Interim dividend for financial year ended 31 December 2011 to be paid in March 2012

** Financing of hire purchase under PCSB (excluding those securitised) is included in the computation of RWA under the AIRB approach;

The investment in owner’s note is accounted in accordance with Securitisation Framework under Risk Weighted Capital Adequacy Framework (Basel II – Risk Weighted Assets Computation) Guideline dated 31 December 2009.

√ The capital base of CIMB Bank Group, CIMB Bank and CIMB Islamic Bank as at 31 December 2011 have excluded portfolio impairment allowance on impaired loans restricted from Tier II capital of RM463,064,140, RM441,690,248 and RM21,373,892 respectively

* The amount presented here is the Solvency Ratio of CIMB Bank Plc, which is the nearest equivalent regulatory compliance ratio. This ratio is computed in accordance with Prakas B7-00-46, B7-04-206 and B7-07-135 issued by the National Bank of Cambodia. This ratio is derived at CIMB Bank Plc’s net worth divided by its risk-weighted assets.

(c) The capital adequacy ratios of CIMB Bank (including the operations of CIMB Bank (L) Limited and CIMB (L) Limited), CIMB Investment Bank, CIMB Islamic Bank, Bank CIMB Niaga and CIMB Thai Bank for the financial year ended 31 December 2010 are as follows:

CIMB BankRM’000

CIMBIslamic

BankRM’000

CIMBThai Bank

RM’000

CIMBBank Group

RM’000

CIMBInvestment

Bank GroupRM’000

Bank CIMBNiaga

RM’000

CIMB BankPLC*

RM’000

31 December 2010 Before deducting proposed dividends Core capital ratio 14.38% 13.22% 9.04% 11.83% 19.76% 9.53% N/A Risk-weighted capital ratio 15.27% 17.19% 14.69% 15.30% 19.80% 13.24% 636.20%

After deducting proposed dividends Core capital ratio 13.81%+ 13.22% 9.04% 11.35%+ 17.06%@ 9.53% N/A Risk-weighted capital ratio 14.71%+ 17.19% 14.69% 14.82%+ 17.11%@ 13.24% 636.20%

The breakdown of risk-weighted assets (“RWA”) by each major risk category are as follows:

Credit risk 87,236,173 7,623,657 10,911,021 104,892,665 1,028,430 36,364,455 17,184 Market risk 9,176,183 285,115 313,670 9,658,308 192,321 394,887 – Operational risk 9,604,531 1,041,278 – 11,242,737 765,308 3,230,655 – Large exposure risk 360,424 – 777,097 360,424 – – –

106,377,311 8,950,050 12,001,788 126,154,134 1,986,059 39,989,997 17,184

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

48 CAPITAL ADEqUACY (CONTINUED)

(d) Components of Tier I and Tier II capital for the financial year ended 31 December 2010 are as follows:

CIMB BankRM’000

CIMBIslamic

BankRM’000

CIMBThai Bank

RM’000

CIMBBank Group

RM’000

CIMBInvestment

Bank GroupRM’000

Bank CIMBNiaga

RM’000

CIMB BankPLC*

RM’000

31 December 2010 Tier I capital Paid-up capital 3,764,469 750,000 837,999 3,764,469 100,000 531,876 114,090 Perpetual preference shares 200,000 70,000 – 200,000 – – – Non-innovative Tier I Capital 1,000,000 – – 1,000,000 – – – Innovative Tier I Capital 1,616,700 – – 1,616,700 – – – Share premium 5,033,633 – 152,364 5,033,633 – 2,283,429 – Other reserves 7,351,412 506,180 95,115 8,051,484 336,741 1,053,455 (1,395) Non-controlling interests – – – 260,586 – – – Less: Investment in subsidiaries and holding of other banking institutions’ capital – – – – – (56,634) – Deferred tax assets (115,206) (7,283) – (82,519) (44,329) – – Intangible assets – – – – – – (3,374) Goodwill (3,555,075) (136,000) – (4,923,428) – – –

Total Tier I capital 15,295,933 1,182,897 1,085,478 14,920,925 392,412 3,812,126 109,321 Tier II capital Redeemable preference shares 29,740 – – 29,740 10 – – Subordinated notes 3,500,000 300,000 342,732 3,936,919 – – – Subordinated loans – – – – – 1,108,000 – Revaluation reserve – – 38,336 – – – – Regulatory reserve 110,190 7,405 – 117,595 – – – Portfolio impairment allowance √ 221,940 30,892 30,840 381,876 650 391,631 – Surplus of total eligible provision over expected loss under the IRB approach 404,989 17,577 – 409,200 209 – – Others – – 265,240 – – 39,333 –

Total eligible Tier II capital 4,266,859 355,874 677,148 4,875,330 869 1,538,964 – Less: Investment in subsidiaries and holding of other banking institutions’ capital (3,000,892) – – (178,194) (50) (56,634) – Securitisation exposures subject to deductions** (70,116) – – (70,116) – – – Investment in associates (245,134) – – (245,134) – – –

Total Eligible Tier II capital 950,717 355,874 677,148 4,381,886 819 1,482,330 –

Total Capital base 16,246,650 1,538,771 1,762,626 19,302,811 393,231 5,294,456 109,321 Less: Proposed dividends (600,903) – – (600,903) (53,500) – –

Total Capital base (net of proposed dividend) 15,645,747 1,538,771 1,762,626 18,701,908 339,731 5,294,456 109,321

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

48 CAPITAL ADEqUACY (CONTINUED)

(d) Components of Tier I and Tier II capital for the financial year ended 31 December 2010 are as follows (Continued):

+ Second interim dividend for financial year ended 31 December 2010 to be paid before 31 March 2011

@ Final dividend for financial year ended 31 December 2010 to be paid before 30 April 2011

** In the previous financial year, CIMB Bank was required to deduct 50% of its investment in its jointly controlled entity, PCSB, from the capital base for purposes of computing the capital adequacy ratio in accordance with a circular by Bank Negara Malaysia (“BNM”) dated 25 April 2006.

As at 31 December 2010, the following has been applied in computing the capital adequacy ratio:

– financing of hire purchase under PCSB (excluding those securitised) is included in the computation of RWA under the AIRB approach;

– the investment in owner’s note is accounted in accordance with Securitisation Framework under Risk Weighted Capital Adequacy Framework (Basel II - Risk Weighted Assets Computation) Guideline dated 31 December 2009.

√ The capital base of CIMB Bank Group, CIMB Bank and CIMB Islamic Bank as at 31 December 2010 have excluded portfolio impairment allowance on impaired loans restricted from Tier II capital of RM495,950,492, RM476,240,986 and RM19,709,506 respectively.

* The amount presented here is the Solvency Ratio of CIMB Bank Plc, which is the nearest equivalent regulatory compliance ratio. This ratio is computed in accordance with Prakas B7-00-46, B7-04-206 and B7-07-135 issued by the National Bank of Cambodia. This ratio is derived at CIMB Bank Plc’s net worth divided by its risk-weighted assets.

With effect from November 2011, CIMB Investment Bank Group has adopted the SA approach to better reflect the nature of the underlying business activities. Had the Investment Bank Group adopted the SA approach in 2010, the capital adequacy ratios and risk-weighted assets are as follows:

CIMB Investment

Bank GroupRM’000

Before deducting proposed dividend Core capital ratio 19.12% Risk-weighted capital ratio 19.16%

After deducting proposed dividend Core capital ratio 16.51% Risk-weighted capital ratio 16.55%

Risk-weighted assets 2,052,644

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

49 BUSINESS COMBINATIONS

Completion of initial accounting for acquisition of additional equity interest in Touch ‘n Go Sdn Bhd (“TnG”) On 26 March 2010, CIMB SI, a wholly owned subsidiary of the Company had acquired additional 32.22% stake in TnG of the total issued and paid-up

share capital of TnG for a cash consideration of RM53,811,107.

The additional investment in TnG has increased the Group’s equity interest in TnG from 20% to 52.22% and accordingly, the results of TnG have been consolidated as a subsidiary in the Financial Statements of the Group.

As allowed by revised FRS 3 – Business Combinations, the Group has accounted for the acquisition of TnG using the provisional fair values of the assets and liabilities which were based on TnG carrying amount as at 25 March 2010. The goodwill on acquisition, which was determined provisionally, represents the value of synergies arising from the acquisition.

In financial year 2011, the Group has completed its allocation of cost of business combination to the assets acquired and liabilities assumed. The fair value adjustments and intangible assets identified on acquisition are based on finalised purchase allocation and fair value exercise.

As required by revised FRS 3, the fair values of assets and liabilities arising from the acquisition of TnG on 26 March 2010 have been restated and are set out as below. The goodwill on acquisition of TnG was restated to RM51,082,000.

Acquiree’sprovisionalfair values

RM’000

Fair valueadjustments

RM’000

Adjustedfair value

RM’000

Cash and short-term funds 221,737 – 221,737 Property, plant and equipment 4,954 – 4,954 Intangible assets 4,889 8,037 12,926 Other assets 44,811 – 44,811 Other liabilities (241,029) – (241,029)

Net assets 35,362 8,037 43,399 Less: Non-controlling interest (23,968) – (23,968)

Net assets acquired 11,394 8,037 19,431 Goodwill on acquisition 34,380*

Purchase consideration satisfied via cash 53,811 Less: Cash and cash equivalents acquired (221,737)

Cash inflow on acquisition (167,926)

* Goodwill arising from previous acquisition of 20% stake in TnG amounted to RM16,702,000. Hence, total goodwill in relation to TnG acquisition during the financial year amounted to RM51,082,000.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

50 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The Group and the Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s and the Company’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are outlined below:

(a) Impairment of available-for-sale equity investments The Group and the Company determine that available-for-sale equity investments are impaired when there has been a significant or prolonged

decline in the fair value below its costs. This determination of what is significant or prolonged required judgement. The Group and the Company evaluate, among other factors, the duration and extent to which the fair value of the investment is less than cost; and the financial health and near-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financial cash flow.

(b) Impairment losses on loans, advances and financing The Group and the Company make allowance for losses on loans, advances and financing based on assessment of recoverability. Whilst

management is guided by the relevant BNM guidelines and accounting standards, management makes judgement on the future and other key factors in respect of the estimation of the amount and timing of the cash flows in assessing allowance for impairment of loans, advances and financing. Among the factors considered are the Group’s aggregate exposure to the borrowers, the net realisable value of the underlying collateral value, the viability of the customer’s business model, the capacity to generate sufficient cash flow to service debt obligations and the aggregate amount and ranking of all other creditor claims.

(c) Goodwill impairment The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in Note L (a) of the

Summary of Significant Group Accounting Policies.

The first step of the impairment review process requires the identification of independent operating units, dividing the Group’s business into the various business segments. The goodwill is then allocated to these various business segments. The first element of this allocation is based on the areas of the business expected to benefit from the synergies derived from the acquisition. The second element reflects the allocation of the net assets acquired and the difference between the consideration paid for those net assets and their fair value. This allocation is reviewed following business reorganisation. The carrying value of the business segment, including the allocated goodwill, is compared to the higher of fair value less cost to sell and value in use to determine whether any impairment exists. Detailed calculations may need to be carried out taking into consideration changes in market in which a business operates. In the absence of readily available market price data, this calculation is usually based upon discounting expected pre-tax cash flows at the Group’s cost of capital, which requires exercise of judgement. Refer to Note 18 for details of these assumptions and the potential impact of changes to the assumptions.

Changes to the assumptions used by management, particularly the discount rate and the terminal growth rate, may significantly affect the results of the impairment.

(d) Intangible assets The Group’s intangible assets that derive their value from contractual customer relationships and core deposits or that can be separated and sold

and have a finite useful life are amortised over their estimated useful life.

Determining the estimated useful life of these intangible assets requires an analysis of circumstances and judgement by the Group’s management. At each statement of financial position date, or more frequently when events or changes in circumstances dictate, intangible assets are assessed for indications of impairment. If indications are present, these assets are subject to an impairment review. The impairment review comprises a comparison of the carrying amount of the assets with its recoverable amount: the higher of fair value less cost to sell and its value in use. Net selling price is calculated by reference to the amount at which the asset could be disposed in a binding agreement in an arm’s length transaction evidenced by an active market or recent transactions for similar assets.

Value in use is calculated by discounting the expected future cash flows obtainable as a result of the assets’ continued use, including those resulting from its ultimate disposal, at a market-based discount rate on pre-tax basis.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

50 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (CONTINUED)

(e) Fair value of financial instruments The majority of the Group’s financial instruments reported at fair value are based on quoted and observable market prices. Where the fair values

of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. The judgments include considerations of liquidity and model inputs such as volatility for longer dated derivatives and discount rates, prepayment rates and default rate assumptions for asset backed securities. The valuation of financial instruments is described in more detail in Note 53.4.

(f) Fair value of associates – CAAB and CATB Following the loss of control over CAAB and CATB on 1 January 2011, the former subsidiaries ceased to be consolidated and the Group’s retained

interest of 51% is recognised as investment in associate at fair value.

The fair value is based on the appraisal valuation, which comprises the Value in Force and Structural Value of the insurance businesses. The appraisal valuation is performed by an independent external actuary, Actuarial Partners Consulting Sdn Bhd, who has applied the actuarial appraisal approach to determine the fair value. The projected cash flows are derived using the following key assumptions, which are determined at the date of valuation:

(i) Risk discount rates• 9.5%, being the currentmarket discount rates used for theMalaysian insurance industry

(ii) New business volume• Projection to their natural termination, a ten-year tranche of new business commencing from 1 January 2012, representing the existing

Structural Value of the Life fund, with an average growth rate of 10% from 2012 onwards; and• ForGeneral Takaful fund, the expected contribution growth on products ranging from an average of 13.7% to 34.3% from 2012 to 2014.

The claims liabilities estimated are following the valuation guidelines for general insurance/general takaful liabilities issued by BNM.

(iii) Investment returns• Investment returns ranging from 3.1% to 3.5% per annum

(iv) Management expense assumptions• Expenses overrun allowed in the valuation is based on the projected new business from 2012 to 2014

(v) Minimum solvency margin• Based on the insurance entities’ internal capital adequacy ratios

(vi) Taxation• 22% to 25%,which represents the net tax rate assumed on surplus transferred to the shareholders’ funds; and• 8% of investment income based on life insurance fund/family takaful fund.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

51 NON-CURRENT ASSETS HELD FOR SALE

The Group

Note2011

RM’0002010

RM’000

Non-current assets held for sale: – property, plant and equipment 14,286 3,411 – prepaid lease payments 17 691 – – foreclosed properties – 8,835 – investment properties 16 2,271 46,804

Total non-current assets held for sale 17,248 59,050

Property, plant and equipment, foreclosed properties and investment properties of the Group where deposits have been received from buyers of the properties and where a definitive buyer has been identified have been classified as held for sale. The disposals are expected to be completed in 2012.

52 CHANGES IN ACCOUNTING POLICIES AND COMPARATIVES

(i) Change in accounting policies During the financial year, the Group and the Company changed the following accounting policies upon adoption of new accounting standards,

amendments and improvements to published standards and interpretations:• Employee Benefits – Management Equity Scheme, to comply with Amendment to FRS 2 “Share-based payment: Group Cash-settled Share

based Payment Transactions”.• Enhanced fair value disclosures of financial instruments. The impact arising from adoption of Amendment to FRS 7 is the enhanced disclosure

of fair value measurements by level of fair value measurement hierarchy and the liquidity risk disclosure on trading derivatives by expected maturity as shown in Note 53.

Refer to the summary of significant group accounting policies for the details of the changes in accounting policies.

(ii) Change in comparatives(a) Certain comparatives were restated to conform to the current financial year’s presentation. There was no significant impact to the financial

performance and ratios in relation to the financial year ended 31 December 2010.

(i) The restatement was in relation to the finalisation of the fair value exercise and purchase price allocation in respect of the acquisition of additional interest in Touch ‘n Go (“TnG”) as allowed by FRS 3 (revised) – “Business Combinations”. There was no significant impact to the statement of income for the financial year ended 31 December 2010.

(ii) The reclassification was in relation to the STAMC short term loan to conform with current year’s presentation.

(iii) Reclassification of a subsidiary’s insurance deposit expense to conform with current year’s presentation.

(b) The revised FRS 101 requires all non-owner changes in equity to be shown in a performance statement, but entities can choose whether to present one performance statement (the Statement of Comprehensive Income) or two statements (the Statement of income and Statement of Comprehensive Income). With effective from financial year ended 2011, the Group has elected to present the Statement of Comprehensive Income in two statements, to give a better presentation of the Group’s performance. Therefore, the Statement of Income and the Statement of Comprehensive Income of the Group and the Company for the financial year ended 31 December 2010 have been re-presented to conform to the current financial year presentation.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

52 CHANGES IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(ii) Change in comparatives (Continued) The impact of the above on the financial statement of the Group are set out as follows:

Impact on the Group’s consolidated statement of changes in equity

Consolidated statement of changes in equity

Balances as at 31 December 2010

As previouslyreportedRM’000

Effects ofadopting

Amendmentto FRS 2

RM’000As restated

RM’000

Retained earnings 7,156,250 (318,071) 6,838,179 Share-based payment reserve – 318,071 318,071

Balances as at 1 January 2010

As previouslyreportedRM’000

Effects ofadopting

Amendmentto FRS 2

RM’000As restated

RM’000

Retained earnings 6,265,787 (298,038) 5,967,749 Share-based payment reserve – 298,038 298,038

Increase/(decrease)to balances as at

31 December 2011Effects of adopting

Amendment to FRS 2RM’000

Retained earnings (23,718) Share-based payment reserve 23,718

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

52 CHANGES IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(ii) Change in comparatives (Continued) Impact on the Group’s consolidated statements of income

For the financial year ended 31 December 2010

As previouslyreportedRM’000

Effects ofadopting

Amendmentto FRS 2

RM’000

Reclassification(Note

52(ii)(a)(iii))RM’000

As restatedRM’000

Interest expenses (4,631,581) – 67,498 (4,564,083) Overheads (6,525,773) (20,033) (67,498) (6,613,304) Profit before taxation and zakat 4,646,750 (20,033) – 4,626,717 Profit after taxation and zakat 3,689,920 (20,033) – 3,669,887 Profit for the financial year attributable to owners of the Parent 3,520,836 (20,033) – 3,500,803 Earnings per share attributable to ordinary equity holders of the Parent – basic (sen) 49.0 (0.3) – 48.7

Increase/(decrease)for the financial

year ended31 December 2011Effects of adopting

Amendment to FRS 2RM’000

Overheads (23,718) Profit before/after taxation and zakat (23,718)

Impact on the Group’s consolidated statements of financial position

Balances as at 31 December 2010

Note

As previouslyreportedRM’000

ReclassificationRM’000

As restatedRM’000

Assets Goodwill (i) 8,159,469 (8,037) 8,151,432 Intangible assets (i) 1,543,295 8,037 1,551,332

Liabilities Bills and acceptances payable (ii) 4,831,366 (298,920) 4,532,446 Other borrowings (ii) 3,484,667 298,920 3,783,587

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT

(a) Financial risk management objectives and policies Risk management is an integral component of the Group’s business, operations and decision-making process. In ensuring that the Group achieves

optimum returns whilst operating within a sound business environment, Group Risk Division (“GRD”) is involved at the early stage of the risk taking process by providing independent inputs such as the relevant valuations, credit evaluations, new product assessments and Capital-at-Risk (“CaR”) quantifications. These inputs enable business units to align their business strategies with the Group’s risk appetite.

The objectives of CIMB Group’s risk management activities are to:

• Identify the various risk exposures and risk capital requirements;

• Ensure risk taking activities are consistent with risk policies and the aggregated risk position are within the risk appetite as approved by theBoard; and

• Create shareholder value through proper allocation of risk capital and facilitate development of new business and products.

(b) Enterprise wide Risk Management Framework CIMB Group employs the Enterprise Wide Risk Management Framework (“EWRM”) to manage its risk and opportunity effectively. It is an on-going

process of identifying, evaluating, monitoring, managing and reporting significant risks affecting the Group implemented through various Board appointed committees.

The key components of the Group’s EWRM framework are represented in the diagram below:

GOVERNANCE

ECONOMIC CAPITAL FRAMEwORk

RISk MANAGEMENT LIMITS & CONTROL

REGULATORY CAPITAL FRAMEwORk– RISk wEIGHTED ASSETS

RISk ANALYSIS & REPORTING STRESS TESTING

The framework is centered on resilient risk and capital management which requires the Group to identify, evaluate, measure, mitigate and monitor/report its material risks, and relate these to its capital requirements and at all times ensure capital adequacy. The Group employs CaR as the common and consistent measurement of risk across CIMB Group. The CaR framework provides the basis of allocating economic capital within the Group. It provides a benchmark to facilitate the comparison of risk across business units and risk types. This enables the Group to consider both the downside risk, for risk protection and upside potential, for earnings growth. Hence, allowing the Group to measure the performance of each business on an absolute basis (economic profit) and relative percentage return basis (“RAROC”) against the Group’s costs of capital.

Strong risk governance holds the EWRM together. The Board of Directors through the Board Risk Committee (“BRC”) is ultimately responsible for the implementation of EWRM. GRD has been principally tasked to assist the various committees and undertakes the performance of the day-to-day risk management functions of the EWRM. The implementation of the EWRM is subjected to the independent assurance and assessment by the Group Internal Audit.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

(b) Enterprise wide Risk Management Framework (Continued) The foundation of the EWRM is made up of three major building blocks, which are Limits and Controls, Analysis and Reports, and Stress Testing.

Limits constitute the key mechanism to control allowable risk taking activities and are regularly reviewed in the face of changing business needs, market conditions, and regulatory changes. Timely reports and meaningful analysis of risk positions are critical to enable the Board and its management to exercise control over all exposures and make informed business decisions.

Stress testing involves identifying possible events or future changes in the financial and economic conditions that could have unfavourable effects on the Group’s exposure and the assessment of the Group’s ability to withstand such changes, usually in relation to the capacity of its capital and earnings to absorb potentially significant losses as well as the sufficiency of its liquidity surplus and reserves. Steps are then identified to manage risk and conserve capital. Group wide stress test is performed semi-annually while stress tests on selected portfolios are performed on an ad hoc basis.

(c) Risk Governance The BRC assumes the ultimate responsibility on behalf of the Boards of Directors for the supervision of risk management within CIMB Group.

In line with best practices, the BRC determines the risk policy objectives and also decides on the yearly allocation of risk capital to support all risks taken by the Group.

Group Risk Committee (“GRC”) is the primary delegated authority for managing risk on a group-wide basis and reports directly to BRC. Sub-committees, namely Group Wholesale Bank Risk Committee (“GWBRC”), Consumer Bank Credit Committee (“CBCC”), Regional Credit Committee (“RCC”), Singapore Business Credit Committee (“SBCC”), Regional Liquidity Risk Committee (“RLRC”) and Operational Risk Committee (“ORC”), delegated from the GRC are set up to manage and control specific risk areas. In relation to Interest rate Risk in the Banking Book (“IRRBB”)/Rate of return Risk in the Banking Book (“RORBB”), GRC is further assisted by Balance Sheet Management Committee (“BSMC”) that is responsible for recommending and executing strategies and hedging proposal of the banking book as well as ensuring the Group’s interest rate/rate of return risk profile is within the risk limits/MATs endorsed by GRC. With this set-up, the Board and BRC through the various risk committees and BSMC maintain oversight of various risks across the Group.

Each committee is chaired by a director respectively. The composition of the committees includes senior management and individuals from business divisions as well as divisions which are independent from the business units. BRC reviews the composition of these committees except for BSMC, to reflect a balance of experienced independent and non-independent individuals with the necessary skills and qualifications to carry out the roles and responsibilities of the relevant committee.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

(c) Risk Governance (Continued) The chart below sets out the organisational structure of the risk management committees overseeing risk management activities and an overview

of the respective committee’s roles and responsibilities:

BOARD OF DIRECTORS

BOARD RISk COMMITTEE

• Review and recommend risk policies and strategies for approval• Oversee entire EWRM and provide strategic guidance to various risk committees

GROUP RISk COMMITTEE

• Review and advise on risk policies and strategies• Overseemanagement of risk, capital allocation and asset liabilitymanagement processes across our Group

Group wholesale Bank Risk Committee (GwBRC)

Consumer Bank Credit Committee

(CBCC)

Regional Credit Committee (RCC)

Singapore Business Credit

Committee (SBCC)

Regional Liquidity Risk Committee

(RLRC)

Operational Risk Committee (ORC)

Balance Sheet Management Committee

(BSMC)

• OverseeGroup’sexposures to market risks

• Evaluate and approveproposals for primary and secondary market deals for debt and equity instruments

• Credit approvalauthority for Malaysian centric cases

• Assign and review theMalaysian Sectorial Exposures

• Review and approveGlobal Banking Institutions Limits for Malaysian centric banking groups

• Credit approvalauthority for Malaysian centric cases

• EnsuringGroup overallloan portfolio/financing meets regulatory guidelines and approved internal policies and procedures

• Oversee thedevelopment of credit policies and procedures, encompassing all products and businesses within Consumer Banking

• Review and approveor concur non-Malaysian centric cases

• EnsuringGroup overallloan portfolio/financing meets regulatory guidelines and approved internal policies and procedures

• Review and approveor concur all non-Malaysian Interbank Limit, Global FI Counterparty Limits and Global Country Limit

• Credit approvalauthority for non-Malaysian centric cases

• EnsuringGroup overallloan portfolio/financing meets regulatory guidelines and approved internal policies and procedures

• Oversee theGroup’soverall liquidity management

• EnsureGroup is ableto meet its cash flow obligations in a timely and cost effective manner

• Oversee operationalrisk management in terms of best practices, policies and risk tolerance

• Review controls andaction plans to address identified risks

• Oversight on allBusiness Continuity Management (BCM)/ Disaster Recovery (DR) activities

• Review balance sheetpositions

• Recommend andexecuting balance sheet strategies and hedging

• Ensure risk profile iskept within the established risk appetite/limits/MAT

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

(c) Risk Governance (Continued) The overseas subsidiaries’ risk committees are set-up in a similar structure in their respective jurisdictions. Whilst recognising the autonomy of the

local jurisdiction and compliance to local requirements, the Group strives to ensure a consistent and standardised approach in its risk governance process. As such, the relevant Group and Regional committees have consultative and advisory responsibilities on regional matters across the Group. This structure increases the regional communication, sharing of technical knowledge and support towards managing and responding to risk management issues, thus allowing the Board to have a comprehensive view of the activities within the Group.

(d) Group Risk Division The primary oversight body for risk management activities is GRD, comprising Group Risk Management (“GRM”), Group Credit (“GC”) and Regional

Credit Management (“RCM”), which are independent of business units and assist the Group’s management and the various risk committees in monitoring and controlling the Group’s risk exposures.

The key responsibilities of GRD are to identify, evaluate, analyse, monitor and review the principal risks to which the Group is exposed. It also helps to create shareholder value through proper allocation of risk capital, development of risk-based pricing framework and facilitate development of new businesses and products. The Head of GRD also maintains an oversight functions performed by the risk management units in the asset management and insurance/takaful subsidiaries.

In ensuring a standardised approach to risk management across the Group, all risk management teams within the Group are required to conform to the Group’s EWRM framework, subject to necessary adjustments required for local regulations. For branches and subsidiaries without any risk management outfit, all risk management activities will be centralised at GRD. Otherwise, the risk management activities will be performed by the local risk management team with matrix reporting line to GRD.

(e) Group Risk Management GRM monitors risk-taking activities, initiates and proposes risk policies, risk measurement methodologies, risk limits and risk capital allocation,

performs independent review of loan/financing assets quality and loan/financing recovery plan, coordinates new products deployments and develops the risk-based product pricing framework for loan/financing portfolios.

In propagating and ensuring compliance to the market risk framework, GRM reviews treasury trading strategies, analyses positions and activities vis-à-vis changes in the financial market and performs mark-to-market as part of financial valuation.

GRM is also tasked with the co-ordination of the Group’s effort towards implementation of the Basel II framework in compliance with the International Convergence of Capital Measurement and Capital Standards prescribed by the Bank of International Settlements and as adopted by BNM. In this regard, GRM develops, implements and validates all internal rating and scoring models and closely monitors the usage of the rating and scoring systems to ensure relevancy to current market conditions and integrity of the ratings.

GRM adds value to business propositions by providing advice on market valuations, CaR quantifications and independent risk assessment. This enables the business units to prepare for the potential risks associated with the new transactions or business ventures and consequently, address the management and mitigation of such risks from the early stage of the proposition. The business units gain understanding of the risk-reward equation of the proposition, consider the risk factors in the pricing decision, and ensure that the projected returns from the business propositions commensurate with the risks taken. In order to ensure the independence of GRM in such an arrangement, GRM’s remuneration is not linked to the success of particular transactions or deals.

(f) Group Credit GC carries out independent assessments and evaluations of all credit risk related proposals originating from the various business units such as

loans/financing and advances, fixed income, derivatives, sales and trading, prior to submission to the CBCC, GWBRC, the Group Executive Committee (“EXCO”) or Board for approval. GC ensures proper grouping of entities and counterparties under the single customer framework. GC also reviews the Bank’s holdings of all fixed income assets issued by Malaysian companies and recommends the internal ratings for GWBRC’s approval.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

(g) Regional Credit Management A regional credit platform was established with a primary objective of enhancing efficiency and effectiveness of the credit oversight as well as credit

approval process for all non-Malaysian centric Corporate and Financial Institutions at the CIMB Group level. The platform includes 2 credit committees, Singapore Business Credit Committee (“SBCC”) for smaller-sized exposures and RCC for larger regional exposures. All credit proposals submitted to the 2 credit committees for approval/concurrence are routed through RCM for independent assessment and due recommendation to the credit committees.

Strategies and Processes for Various Risk Management These information are available in later sections for each Credit Risk, Market Risk and Liquidity Risk.

53.1 Credit risk Credit risk is defined as arising from losses due to the obligor, market counterparty or issuer of securities or other instruments held, failing to

perform its contractual obligations to the Group. It arises primarily from lending/financing activities through loans/financing assets as well as commitments to support clients’ obligations to third parties, i.e. guarantees. In sales and trading activities, credit risk arises from the possibility that the Group’s counterparties will not be able or willing to fulfil their obligation on transactions on or before settlement date. In derivative activities, credit risk arises when counterparties to derivative contracts, such as interest/profit rate swaps, are not able to or willing to fulfil their obligation to pay the positive fair value or receivable resulting from the execution of contract terms. Credit risk may also arise where the downgrading of an entity’s rating causes the fair value of the Group’s investment in that entity’s financial instruments to fall.

Credit Risk Management The purpose of credit risk management is to keep credit risk exposure to an acceptable level vis-à-vis the capital and to ensure the returns

commensurate with risk.

The credit approving authority is established and documented in the Group’s credit policy. The Group adopts a multi-tiered credit approving authority spanning various delegated authorities and various credit committees. The credit committees namely, SBCC, CBCC, RCC and GWBRC are set up to enhance the efficiency and effectiveness of the credit oversight as well as the credit approval process for all credit applications originating from the Group’s business units. The Committees also ensures the overall loan/financing portfolio meets the guidelines of the regulatory authorities and adherence to the approved credit policies and procedures.

All credit applications are independently evaluated by GC/RCM prior to submission to the relevant committees for approval. Adherence to and compliance with single customer, country and global counterparty limits as well as the assessment of the quality of collateral are approaches adopted to address concentration risk to any large sector/industry, or to a particular counterparty group or individual.

Adherence to established credit limits is monitored daily by GRM, which combines all exposures for each counterparty or group, including off balance sheet items and potential exposures. Limits are also monitored based on rating classification of the obligor and/or counterparty.

It is a policy of the Group that all exposures must be rated or scored based on the appropriate internal rating models, where available. Retail exposures are managed on a portfolio basis and the risk rating models are designed to assess the credit worthiness and the likelihood of the obligors to repay their debts, performed by way of statistical analysis from credit bureau and demographic information of the obligors. The risk rating models for non-retail exposures are designed to assess the credit worthiness of the corporations or entities in paying their obligations, derived from risk factors such as financial history and demographics or company profile. These rating models are developed and implemented to standardise and enhance the credit underwriting and decision-making process for the Group’s retail and non-retail exposures.

Credit reviews and rating are conducted on the credit exposures on an annual basis and more frequently when material information on the obligor or other external factors come to light.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued) Credit Risk Management (Continued) The exposures are actively monitored, reviewed on a regular basis and reported monthly to GRC and BRC so that deteriorating exposures are

identified, analysed and discussed with the relevant business units for appropriate remedial actions including recovery actions, if required.

In addition to the above, the Group also employs CaR to measure and manage credit portfolio risk due to credit events. The Group adopted the Monte Carlo simulation approach in the generation of possible portfolio scenarios to obtain the standalone and portfolio CaR. This approach takes into account the credit concentration risk and the correlation between obligors/counterparties and industries. In estimating the portfolio CaR, the Group uses 25,000 simulation numbers at 99% confidence level. The generated portfolio CaR and any shortfall in the provision for defaulted accounts make up to the total Credit CaR utilisation to be compared against the allocated capital. The CaR usage versus pre-determined limit is monitored by Risk Management & Analytics (“RMA”) within GRM. Any exception will be highlighted to Management in accordance with the Group’s exception management procedure. These are summarised and reported to GRC and BRC on a monthly basis.

Credit Risk Mitigation The employment of various credit risk mitigation techniques such as appropriate credit structuring, and posting of collateral and/or third party

support form an integral part of the credit risk management process. Credit risk mitigants are taken where possible and is considered secondary recourse to the obligor for the credit risk underwritten.

Collaterals/Securities All extension of credit in so far as deemed prudent, must be appropriately and adequately secured. A credit proposal is considered secured only

when the entire proposal is fully covered by approved collateral/securities within their approved margins as set out in the relevant credit policy guides. GWBRC/RCC is empowered to approve any inclusion of new acceptable collaterals/securities.

Recognised collaterals include both financial and physical assets. Financial collaterals consist of mainly cash deposits, shares, unit trusts and debt securities, while physical collateral include land and buildings and vehicles. Guarantors accepted are in line with BNM’s Risk Weighted Capital Adequacy Framework (“BASEL II”) (“RWCAF”) and Capital Adequacy Framework for Islamic Banks (“CAFIB”) guidelines. Eligible credit protection is also used to mitigate credit losses in the event that the obligor/counterparty defaults.

Collateral Valuation and Management The Group has in place policies which govern the determination of eligibility of various collaterals including credit protection, to be considered for

credit risk mitigation which includes the minimum operational requirements that are required for the specific collateral to be considered as effective risk mitigants.

The collateral is valued periodically ranging from daily to annually, depending on the type of collateral. Specifically for real estate properties, a framework for valuation of real estate properties is established to ensure adequate policies and procedures are in place for efficient and proper conduct of valuation of real estate properties and other related activities in relation to the interpretation, monitoring and management of valuation of real estate properties.

Netting In mitigating the credit risks in swaps and derivative transactions, the Group enters into master agreements that provide for closeout and

settlement netting arrangements with counterparties, whenever possible. A master agreement that governs all transactions between two parties, creates the greatest legal certainty that credit exposure will be netted. In effect, it enables the netting of outstanding obligations upon termination of outstanding transactions if an event of default occurs.

Concentrations within risk mitigation CIMB Group avoids unwanted credit or market risk concentrations by diversifying its portfolios through a number of measures. Amongst others,

there are guidelines in place relating to maximum exposure to any counterparty, sectors and country.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued) Off Balance Sheet Exposures and Counterparty Credit Risk (“CCR”) CCR limits are established at the individual counterparty level and approved by GWBRC and/or RCC. These limits are monitored and reported at

both business and at the Group level.

Credit Risk Mitigation For credit derivatives and swaps transactions, the Group enters into master agreement with counterparties, whenever possible. Further, the Group

may also enter into Credit Support Annexes (“CSA”) with counterparties. The net credit exposure with each counterparty is monitored and our Group may request for additional margin for any exposures above the agreed threshold, in accordance with the terms specified in the relevant CSA or the master agreement. The eligibility of collaterals and frequency calls are negotiated with the counterparty and endorsed by GWBRC and/or RCC.

Treatment of Rating Downgrade In the event of a one-notch downgrade of rating, based on the terms of the existing CSA and our exposure as at 31 December 2011, there will

be no requirement for additional collateral to be posted.

On the other hand, counterparty rating is being monitored and in the event of a rating downgrade, remedial actions such as revision of the counterparty credit limit, suspension of the limit or the request for additional collateral may be taken.

53.1.1 (a) Maximum exposure to credit risk (without taking into account any collateral held or other credit enhancements) For financial assets recognised in the statement of financial position, the exposure to credit risk equals their carrying amount. For

financial guarantees and similar contract granted, it is maximum amount that the Group and the Company would have to pay if the guarantees were called upon. For credit related commitments and contingents that are irrevocable over the life of the respective facilities, it is generally the full amount of the committed facilities.

The GroupMaximum exposure

2011RM’000

2010RM’000

Items not recognised in the statements of financial position Financial guarantees 4,155,355 4,399,652 Credit related commitments and contingencies 49,465,662 47,049,824

53,621,017 51,449,476

The financial effect of collateral (quantification to the extent to which collateral and other credit enhancements mitigate credit risk) held for net loans, advances and financing for the Group is 65% (2010: 70%) while the financial effect of collateral for the Group is 60% (2010: 59%). The financial effect of collateral held for the remaining on balance sheet financial assets are insignificant.

53.1.2 Concentration of risks of financial assets with credit risk exposure A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic

characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(a) Geographical sectors The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) based on the

location of the counterparty as at 31 December 2011 and 31 December 2010 are as follows:

The Group2011

MalaysiaRM’000

IndonesiaRM’000

ThailandRM’000

SingaporeRM’000

United States

RM’000

United kingdom

RM’000

Hongkong

RM’000Others

RM’000Total

RM’000

Items recognised in the statements of financial position Cash and short-term funds 21,476,743 4,089,693 217,240 2,113,996 1,400,608 1,095,606 723,305 414,612 31,531,803 Reverse repurchase agreements 4,169,452 – – 61,030 – – – – 4,230,482 Deposits and placements with banks and other financial institutions 2,033,552 1,453,179 103,059 159,149 – 127,086 95,367 202,620 4,174,012 Financial investments at fair value through profit or loss – Financial assets held for trading – Money market instruments 5,342,968 58,867 – 2,701,268 208,171 – – – 8,311,274 – Quoted securities – 599,693 221,426 – – – – – 821,119 – Unquoted securities 2,258,052 75,902 153,720 489,618 64,273 79,426 53,844 73,909 3,248,744 Financial investments available-for-sale – Money market instruments 912,653 25,874 – – – – – – 938,527 – Quoted securities – 2,321,511 853,847 – – – – – 3,175,358 – Unquoted securities 7,110,001 241,084 94,919 164,294 – – 345,536 179,985 8,135,819 Financial investments held-to-maturity – Money market instruments 2,355,073 – – 490,777 – – – – 2,845,850 – Quoted securities – 2,299,237 1,780,436 – 59,748 – – 55,493 4,194,914 – Unquoted securities 8,189,740 36,938 39,044 962,346 254,944 24,966 60,421 309,620 9,878,019 Derivative financial instruments – Trading derivatives 1,413,127 19,877 211,601 894,950 681,375 229,791 114,836 451,334 4,016,891 – Hedging derivatives 104,688 28,575 – 103,980 18,571 – – 1,368 257,182 Loans, advances and financing – Overdrafts 4,613,129 5,848 672,506 83,310 57 800 1,399 54,264 5,431,313 – Term loans/financing 96,439,961 23,282,618 7,780,920 8,351,178 53,145 587,532 581,148 1,562,648 138,639,150 – Bills receivable 692,399 566 2,873,289 17,099 3,107 2,025 – 7,877 3,596,362 – Trust receipts 376,398 47,744 587,025 105,566 – – 7,817 5 1,124,555 – Claim on customers under acceptance credit 3,265,824 831,494 5,058 – – – – – 4,102,376 – Credit card receivables 4,068,576 915,976 – 436,002 – – – – 5,420,554 – Revolving credit 3,927,957 18,611,230 54,618 390,266 – 367,137 6,165 337,055 23,694,428 – Share margin financing 497,270 912,096 46,094 367,960 – – – 6,619 1,830,039 Other assets 4,236,742 1,135,114 185,896 377,651 15,148 16,805 141,951 21,817 6,131,124

173,484,305 56,993,116 15,880,698 18,270,440 2,759,147 2,531,174 2,131,789 3,679,226 275,729,895

Items not recognised in the statements of financial position Financial guarantees 3,300,949 568,590 59,553 169,408 – 50,428 – 6,427 4,155,355 Credit related commitments and contingencies 44,005,130 1,221,153 997,069 2,859,376 2,217 63,284 18,574 298,859 49,465,662

Total credit exposures 220,790,384 58,782,859 16,937,320 21,299,224 2,761,364 2,644,886 2,150,363 3,984,512 329,350,912

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(a) Geographical sectors (Continued) The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) based on the

location of the counterparty as at 31 December 2011 and 31 December 2010 are as follows (Continued):

The Group2010

MalaysiaRM’000

IndonesiaRM’000

ThailandRM’000

SingaporeRM’000

United States

RM’000

United kingdom

RM’000

Hongkong

RM’000Others

RM’000Total

RM’000

Items recognised in the statements of financial position Cash and short-term funds 16,121,244 3,170,480 157,517 1,034,009 1,586,252 142,071 1,251,980 687,607 24,151,160 Reverse repurchase agreements 2,687,276 – 1,014,376 12,074 – 90,936 – – 3,804,662 Deposits and placements with banks and other financial institutions 4,307,520 2,879,320 60,687 1,562,265 241,259 624,583 898,840 1,171,349 11,745,823 Financial investments at fair value through profit or loss – Financial assets held for trading – Money market instruments 8,380,084 6,763 – 2,047,763 – – – – 10,434,610 – Quoted securities 5 1,605,911 8,800 – – – – – 1,614,716 – Unquoted securities 1,851,805 76,018 247,444 604,601 22,531 42,962 – 30,226 2,875,587 – Financial assets designated at fair value through profit or loss – Money market instruments 449,881 – – – – – – – 449,881 – Unquoted securities 265,410 – – – – – – – 265,410 Financial investments available-for-sale – Money market instruments 813,236 – – – – – – – 813,236 – Quoted securities – 2,090,905 569,023 – – – – – 2,659,928 – Unquoted securities 6,288,078 90,186 – 15,258 – – – 45,232 6,438,754 Financial investments held-to-maturity – Money market instruments 1,988,979 – – – – – – – 1,988,979 – Quoted securities – 391,840 943,124 38,245 57,817 – – 402,579 1,833,605 – Unquoted securities 8,544,824 3,532 333,445 914,984 – 24,052 108,193 368,649 10,297,679 Derivative financial instruments – Trading derivatives 1,406,040 41,138 65,381 506,076 840,338 125,429 57,124 370,086 3,411,612 – Hedging derivatives 16,813 21,339 – 93,167 34,224 – – – 165,543 Loans, advances and financing – Overdrafts 4,851,224 2,372 627,578 80,726 68 289 5,495 5,553 5,573,305 – Term loans/financing 86,395,695 16,312,478 6,572,502 5,688,587 50,188 203,004 268,354 1,218,827 116,709,635 – Bills receivable 413,125 – 2,002,191 63,070 2,896 – – 10,233 2,491,515 – Trust receipts 409,787 34,843 449,592 48,431 – – – – 942,653 – Claim on customers under acceptance credit 3,472,377 465,582 5,142 286 – – – – 3,943,387 – Credit card receivables 3,885,531 686,228 – 290,000 – – – – 4,861,759 – Revolving credit 4,170,981 18,525,812 51,401 361,530 – 174,793 57,142 33,706 23,375,365 – Share margin financing 623,747 136,573 18,815 496,448 – – – – 1,275,583 – Other loans 8,183 – – – – – – – 8,183 Other assets 4,575,119 513,317 76,042 808,959 28,180 86,779 103,056 24,068 6,215,520

161,926,964 47,054,637 13,203,060 14,666,479 2,863,753 1,514,898 2,750,184 4,368,115 248,348,090

Items not recognised in the statements of financial position Financial guarantees 1,079,020 939,865 392,916 1,867,101 – 49,340 71,395 15 4,399,652 Credit related commitments and contingencies 41,551,273 1,043,713 1,003,400 2,879,636 – 37,294 13 534,495 47,049,824

Total credit exposures 204,557,257 49,038,215 14,599,376 19,413,216 2,863,753 1,601,532 2,821,592 4,902,625 299,797,566

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(a) Geographical sectors (Continued) The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) based on the

location of the counterparty as at 31 December 2011 and 31 December 2010 are as follows (Continued):

The CompanyMalaysia

RM’000Indonesia

RM’000Total

RM’000

2011 Items recognised in the statements of financial position Cash and short-term funds 316,822 6 316,828 Derivative financial instruments – Hedging derivatives 17,459 – 17,459 Loans, advances and financing – Term loans/financing 930 – 930 Other assets 21,959 – 21,959 Amount owing by subsidiaries 4,811 – 4,811

361,981 6 361,987

2010 Items recognised in the statements of financial position Cash and short-term funds 528,646 1,179 529,825 Derivative financial instruments – Hedging derivatives 5,676 – 5,676 Loans, advances and financing – Term loans/financing 1,147 – 1,147 Other assets 8,509 – 8,509 Amount owing by subsidiaries 19,267 – 19,267

563,245 1,179 564,424

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) for items

recognised in the statements of financial position as at 31 December 2011 and 31 December 2010 based on the industry sectors of the counterparty are as follows:

The Group2011

Cash and short term

fundsRM’000

Reverse repurchase agreements

RM’000

Deposits and

placements with banks

and other financial

institutionsRM’000

Financial investments at fair value

through profit or

loss (i)RM’000

Financial investments

available-for-sale (i)

RM’000

Financial investments

held-to-maturity (i)

RM’000

Derivative financial instruments

Loans, advances

and financing

(ii)RM’000

Other financial

assetsRM’000

Trading derivatives

RM’000

Hedging derivatives

RM’000

Total credit exposures

RM’000

Agriculture – – – – 172,407 102,873 2,858 – 5,085,963 14,869 5,378,970Mining and quarrying – – – – – – 7,627 – 3,479,946 24 3,487,597Manufacturing – – – 314,068 145,652 59,440 51,683 – 14,946,693 15,874 15,533,410Electricity, gas and water – – – 256,146 1,310,097 596,184 32,319 – 1,730,886 7,210 3,932,842Construction – – – 278,563 862,925 303,300 15,285 – 3,319,539 1,180 4,780,792Transport, storage and communications – 3,445 – 118,615 1,170,241 2,647,533 237,429 – 9,206,626 9,726 13,393,615Education and health – – – 2,021 5,544 – (2) – 2,670,131 – 2,677,694Trade and hospitality – – – – – – – – 4,668,640 – 4,668,640Finance, insurance, real estate business:Finance, insurance and business services 20,551,172 137,370 4,118,808 4,664,605 3,086,506 5,499,043 3,527,531 257,182 14,089,164 3,593,961 59,525,342Real estate – – – 55,462 300,972 148,123 885 – 7,312,284 10,623 7,828,349Others:Purchase of landed property– Residential – – – – – – – – 47,430,865 60 47,430,925– Non-residential – – – – – – – – 7,724,760 – 7,724,760General commerce – – – 26,071 – – 18,211 – 12,456,844 174,339 12,675,465Government and government agencies 10,957,831 4,040,419 55,204 6,379,768 4,710,994 6,993,506 2,656 – 12,610,760 309,020 46,060,158Purchase of securities – 18,180 – – – – – – 6,463,532 1,269,769 7,751,481Purchase of transport vehicles – – – – – – – – 12,544,718 – 12,544,718Consumption credit – 26,982 – – 81,986 – – – 12,657,951 – 12,766,919Others 22,800 4,086 – 285,818 402,380 568,781 120,409 – 5,439,475 724,469 7,568,218

31,531,803 4,230,482 4,174,012 12,381,137 12,249,704 16,918,783 4,016,891 257,182 183,838,777 6,131,124 275,729,895

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued)

The Group2010

Cash and short term

fundsRM’000

Reverse repurchase agreements

RM’000

Deposits and

placements with banks

and other financial

institutionsRM’000

Financial investments at fair value

through profit or

loss (i)RM’000

Financial investments

available-for-sale (i)

RM’000

Financial investments

held-to-maturity (i)

RM’000

Derivative financial instruments

Loans, advances

and financing

(ii)RM’000

Other financial

assetsRM’000

Trading derivatives

RM’000

Hedging derivatives

RM’000

Total credit exposures

RM’000

Agriculture – – – – 154,034 108,362 5,219 – 4,705,521 12,386 4,985,522Mining and quarrying – – – – – – 11,239 – 1,578,644 7,001 1,596,884Manufacturing – – – 274,547 250,323 80,357 27,111 – 14,562,248 81,595 15,276,181Electricity, gas and water – – – 217,321 1,099,556 346,642 36,851 – 1,663,628 9,234 3,373,232Construction – 1,558 – 138,427 1,024,162 277,985 16,592 – 4,547,569 4,812 6,011,105Transport, storage and communications – 26,230 – 236,196 699,440 2,813,174 183,724 – 6,298,602 23,904 10,281,270Education and health – – – – – – – – 1,926,924 – 1,926,924Trade and hospitality – – – – – – – – 3,425,596 – 3,425,596Finance, insurance, real estate business:Finance, insurance and business services 8,941,363 1,182,178 8,726,017 4,131,600 3,074,087 5,479,868 2,977,960 165,543 15,935,327 2,057,255 52,671,198Real estate – – – 200,603 181,106 – 54 – 3,796,727 24,418 4,202,908Others:Purchase of landed property– Residential – – – – – – – – 35,986,836 – 35,986,836– Non-residential – – – – – – – – 6,441,776 – 6,441,776General commerce – – – 23,855 56,919 4,639 8,590 – 9,110,725 34,962 9,239,690Government and government agencies 15,190,917 2,530,859 3,019,806 9,900,791 2,843,228 4,919,322 1,663 – 10,597,839 282,608 49,287,033Purchase of securities – – – 32,471 168,388 17,662 40,915 – 4,835,556 941,164 6,036,156Purchase of transport vehicles – – – – – – – – 10,769,291 – 10,769,291Consumption credit – 47,290 – 1,990 66,207 – – – 11,379,498 108,184 11,603,169Others 18,880 16,547 – 482,403 294,468 72,252 101,694 – 11,619,078 2,627,997 15,233,319

24,151,160 3,804,662 11,745,823 15,640,204 9,911,918 14,120,263 3,411,612 165,543 159,181,385 6,215,520 248,348,090

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued)(i) Financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments held-to-

maturity are further analysed by types of securities as follows:

Financial assets held for trading

Financial assets designated at fair value through profit or loss Financial investments available-for-sale Financial investments held-to-maturity

The Group2011

Money market

instrumentsRM’000

quoted securities

RM’000

Unquoted securities

RM’000

Money market

instrumentsRM’000

Unquoted securities

RM’000

Money market

instrumentsRM’000

quoted securities

RM’000

Unquoted securities

RM’000

Money market

instrumentsRM’000

quoted securities

RM’000

Unquoted securities

RM’000

Total credit exposures

RM’000

Agriculture – – – – – – – 172,407 – – 102,873 275,280Manufacturing 9,891 – 304,178 – – – – 145,652 – – 59,440 519,161Electricity, gas and water 46,059 – 210,087 – – – 9,218 1,300,879 – – 596,184 2,162,427Construction – – 278,563 – – – – 862,925 – – 303,300 1,444,788Transport, storage and communications – – 118,615 – – – – 1,170,241 – – 2,647,533 3,936,389Education and health – 2,021 – – – – 5,544 – – – – 7,565Trade and hospitality – – – – – – – – – – – –Finance, insurance, real estate business:Finance, insurance and business services 2,800,877 300,573 1,563,153 – – 325,135 397,430 2,363,939 265,431 1,860,490 3,373,121 13,250,149Real estate – – 55,462 – – – – 300,972 – – 148,123 504,557Others:General commerce – – 26,071 – – – – – – – – 26,071Government and government agencies 5,454,447 518,525 406,796 – – 613,392 2,763,166 1,334,437 2,580,419 2,334,424 2,078,663 18,084,269Consumption credit – – – – – – – 81,986 – – – 81,986Others – – 285,819 – – – – 402,381 – – 568,782 1,256,982

8,311,274 821,119 3,248,744 – – 938,527 3,175,358 8,135,819 2,845,850 4,194,914 9,878,019 41,549,624

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued)(i) Financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments held-to-

maturity are further analysed by types of securities as follows (Continued):

Financial assets held for trading

Financial assets designated at fair value through profit or loss Financial investments available-for-sale Financial investments held-to-maturity

The Group2010

Money market

instrumentsRM’000

quoted securities

RM’000

Unquoted securities

RM’000

Money market

instrumentsRM’000

Unquoted securities

RM’000

Money market

instrumentsRM’000

quoted securities

RM’000

Unquoted securities

RM’000

Money market

instrumentsRM’000

quoted securities

RM’000

Unquoted securities

RM’000

Total credit exposures

RM’000

Agriculture – – – – – – – 154,034 – 3,392 104,970 262,396Manufacturing 88,826 205 185,516 – – – – 250,323 – 16,321 64,036 605,227Electricity, gas and water 115,393 – 95,710 – 6,217 – – 1,099,556 – – 346,642 1,663,518Construction – – 136,430 – 1,997 – – 1,024,162 – 3,392 274,593 1,440,574Transport, storage and communications – – 220,163 – 16,033 – – 699,440 – 56,257 2,756,916 3,748,809Finance, insurance,

real estate business:

Finance, insurance and business services 2,609,092 167,994 1,267,600 30,548 56,368 184,494 1,217,759 1,671,834 264,840 607,158 4,607,871 12,685,558Real estate 18,038 – 182,564 – – – – 181,106 – – – 381,708Others:

General commerce – – 23,855 – – – – 56,919 – – 4,639 85,413Government and government agencies 7,603,261 1,414,046 464,151 419,333 – 628,742 1,273,782 940,705 1,724,139 1,129,423 2,065,760 17,663,342Purchase of securities – 32,471 – – – – 168,387 – – 17,662 – 218,520Consumption credit – – – – 1,990 – – 66,207 – – – 68,197Others – – 299,598 – 182,805 – – 294,468 – – 72,252 849,123

10,434,610 1,614,716 2,875,587 449,881 265,410 813,236 2,659,928 6,438,754 1,988,979 1,833,605 10,297,679 39,672,385

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued)(ii) Loans, advances and financing are further analysed by product types as follows:

The Group2011

OverdraftsRM’000

Term loans/

financingRM’000

Bills receivable

RM’000

Trust receiptsRM’000

Claim on customers

under acceptance

creditRM’000

Credit card receivables

RM’000

Revolving credit

RM’000

Share margin

financingRM’000

Total credit exposures

RM’000

Agriculture 192,981 2,772,137 551 19,062 133,536 – 1,967,697 – 5,085,964Mining and quarrying 17,479 1,906,538 858 123 6,110 – 1,548,839 – 3,479,947Manufacturing 703,180 4,616,600 2,055,186 577,932 1,831,230 – 5,162,565 – 14,946,693Electricity, gas and water 4,527 1,341,775 – 1,911 – – 382,673 – 1,730,886Construction 542,686 1,740,814 29,988 42,527 143,763 – 819,762 – 3,319,540Transport, storage and communications 179,697 7,719,346 44,761 8,609 9,028 – 1,245,185 – 9,206,626Education and health 210,969 2,278,357 8,312 1,700 54,320 – 116,473 – 2,670,131Trade and hospitality 805,501 1,912,468 37,563 153,800 1,008,314 – 750,994 – 4,668,640Finance, insurance,

real estate business:

Finance, insurance and business services 370,652 9,536,482 232,700 17,930 896,192 – 3,035,212 – 14,089,168Real estate 203,563 5,506,446 204,073 295 700 – 1,397,206 – 7,312,283Others:

Purchase of landed property– Residential 20,396 47,410,468 – – – – – – 47,430,864– Non-residential 144,160 7,580,601 – – – – – – 7,724,761General commerce 47,326 7,516,979 314,725 161,376 – – 4,416,437 – 12,456,843Government and government agencies – 12,610,760 – – – – – – 12,610,760Purchase of securities 19,306 4,518,653 – – – – 95,534 1,830,039 6,463,532Purchase of transport vehicles – 11,775,998 – – – – 768,720 – 12,544,718Consumption credit 1,711,694 5,363,668 984 – – 5,420,554 161,051 – 12,657,951Others 257,196 2,531,060 666,661 139,290 19,183 – 1,826,080 – 5,439,470

5,431,313 138,639,150 3,596,362 1,124,555 4,102,376 5,420,554 23,694,428 1,830,039 183,838,777

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177 Annual Report 2011Financial Statements

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued)(ii) Loans, advances and financing are further analysed by product types as follows (Continued):

The Group2010

OverdraftsRM’000

Term loans/

financingRM’000

Bills receivable

RM’000

Trust receiptsRM’000

Claim on customers

under acceptance

creditRM’000

Credit card receivables

RM’000

Revolving credit

RM’000

Share margin

financingRM’000

Other loans

RM’000

Total credit exposures

RM’000

Agriculture 130,103 1,922,419 5,423 3,778 148,864 – 2,494,933 – – 4,705,520Mining and quarrying 27,600 381,976 3,060 2,779 10,262 – 1,152,966 – – 1,578,643Manufacturing 656,931 4,274,350 1,362,212 350,238 1,908,819 – 6,009,697 – – 14,562,247Electricity, gas and water 13,390 1,438,335 9,704 4,422 3,478 – 194,299 – – 1,663,628Construction 556,636 2,612,119 51,475 62,341 124,141 – 1,132,674 – 8,183 4,547,569Transport, storage and communications 182,710 5,069,106 18,070 10,343 11,905 – 1,006,468 – – 6,298,602Education and health 180,904 7,619,559 23,207 2,313 74,714 – 85,764 – – 7,986,461Trade and hospitality 820,642 1,193,672 37,188 170,456 1,078,426 – 125,216 – – 3,425,600Finance, insurance,

real estate business:

Finance, insurance and business services 432,874 15,277,698 118,511 19,604 39,005 – 4,585,935 – – 20,473,627Real estate 203,280 3,095,980 32,628 359 682 – 463,798 – – 3,796,727Others:

Purchase of landed property– Residential 11,973 35,960,584 – – – – 14,278 – – 35,986,835– Non-residential 151,065 6,286,346 – – – – 4,365 – – 6,441,776General commerce 260,384 1,760,700 730,848 299,096 527,700 – 5,531,997 – – 9,110,725Purchase of securities 18,389 3,446,516 – – – – 95,069 1,275,583 – 4,835,557Purchase of transport vehicles – 10,769,291 – – – – – – – 10,769,291Consumption credit 1,793,126 4,587,608 5,279 76 – 4,861,759 131,651 – – 11,379,499Others 133,298 11,013,376 93,910 16,848 15,391 – 346,255 – – 11,619,078

5,573,305 116,709,635 2,491,515 942,653 3,943,387 4,861,759 23,375,365 1,275,583 8,183 159,181,385

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178Annual Report 2011Financial Statements

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued) The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) for items

recognised in the statement of financial position based on the industry sectors of the counterparty are as follows:

The Company

Cash and short term

fundsRM’000

Derivative financial

instruments*RM’000

Loans, advances and

financing**RM’000

Other financial assets***

RM’000

Total credit exposures

RM’000

2011 Finance, insurance, real estate business:

Finance, insurance and business services 316,828 17,459 – 26,726 361,013 Others:

Others – – 930 44 974

316,828 17,459 930 26,770 361,987

2010 Finance, insurance, real estate business:

Finance, insurance and business services 529,825 5,676 – 27,677 563,178 Others:

Others – – 1,147 99 1,246

529,825 5,676 1,147 27,776 564,424

* Relates to trading and hedging derivatives** Relates to term loans*** Other financial assets include amount owing by subsidiaries and other financial assets

Page 181: Cimb Ar2011 (Fs)

179 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.2 Concentration of risks of financial assets with credit risk exposure (Continued)

(b) Industry sectors (Continued) The analysis of credit risk concentrations for items not recognised in the statements of financial position based on the industry sectors

of the counterparty are as follows:

The Group

Financial guarantees

2011RM’000

Credit related commitments

and contingencies

2011RM’000

Financial guarantees

2010RM’000

Credit related commitments

and contingencies

2010RM’000

Agriculture 10,296 659,412 8,408 1,153,011 Mining and quarrying 31,830 1,177,509 38,060 663,823 Manufacturing 269,135 5,256,288 340,381 4,825,520 Electricity, gas and water 68,415 396,135 27,396 1,089,154 Construction 78,569 2,624,860 233,139 3,376,824 Transport, storage and communications 88,103 1,119,063 57,558 888,479 Education and health 42,794 3,036,166 45,491 1,961,952 Trade and hospitality 103,909 6,523,880 115,126 4,677,732 Finance, insurance, real estate business:

Finance, insurance and business services 3,017,538 4,503,438 2,355,212 4,224,881 Real estate 81 198,526 46,875 1,145,798 Others:

Purchase of landed property – Residential – 17,640 – 298,509 General commerce 403,291 1,011,150 991,542 1,738,537 Purchase of transport vehicles – – – 197,724 Consumption credit 229 855 – 669,766 Others 41,165 22,940,740 140,464 20,138,114

4,155,355 49,465,662 4,399,652 47,049,824

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets Financial assets are required under FRS 7, to be categorised into “neither past due nor impaired”, “past due but not impaired” or

“impaired”.

(a) Loans, advances and financing Loans, advances and financing of the Group are summarised as follows:

The Group

Neither past due nor

impaired(i)

RM’000

Past due but not impaired

(ii)RM’000

Impaired(iii)

RM’000

Total gross amountRM’000

2011 Overdrafts 4,730,020 638,115 688,036 6,056,171 Term loans/financing 126,003,390 10,889,921 7,255,228 144,148,539 Bills receivable 3,548,690 63,019 118,689 3,730,398 Trust receipts 1,089,738 12,771 198,429 1,300,938 Claim on customers under acceptance credit 4,016,958 10,349 551,773 4,579,080 Credit card receivables 5,043,398 443,978 112,084 5,599,460 Revolving credit 23,533,514 140,958 823,732 24,498,204 Share margin financing 1,760,276 62,222 55,820 1,878,318 Other loans – – 890 890

Total 169,725,984 12,261,333 9,804,681 191,791,998

Less: Impairment allowances * (7,953,221)

Total net amount 183,838,777

2010 Overdrafts 4,823,881 675,207 819,340 6,318,428 Term loans/financing 103,526,901 11,684,676 7,031,043 122,242,620 Bills receivable 2,461,315 35,994 126,742 2,624,051 Trust receipts 901,950 18,919 222,985 1,143,854 Claim on customers under acceptance credit 3,824,505 60,550 664,227 4,549,282 Credit card receivables 4,702,082 173,369 104,139 4,979,590 Revolving credit 22,936,657 124,832 1,249,949 24,311,438 Share margin financing 1,280,311 – 64,407 1,344,718 Other loans 8,183 – 1,547 9,730

Total 144,465,785 12,773,547 10,284,379 167,523,711

Less: Impairment allowances * (8,342,326)

Total net amount 159,181,385

* Impairment allowances include allowances against financial assets that have been impaired and those subject to portfolio impairment

Loans, advances and financing of the Company as at 31 December 2011 of RM930,000 (31 December 2010: RM1,147,000) are categorised as “neither past due nor impaired”.

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181 Annual Report 2011Financial Statements

CIMB GROUP HOLDINGS BERHAD

Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(a) Loans, advances and financing (Continued)(i) Loans, advances and financing that are “neither past due nor impaired” The credit quality of loans, advances and financing that are “neither past due nor impaired” can be assessed by reference to

the internal rating system adopted by the Group and the Company.

The GroupGood

RM’000Satisfactory

RM’000No rating

RM’000Total

RM’000

2011 Overdrafts 1,758,808 488,021 2,483,191 4,730,020 Term loans/financing 50,193,503 4,438,643 71,371,244 126,003,390 Bills receivable 1,825,937 1,039,181 683,572 3,548,690 Trust receipts 883,212 122,232 84,294 1,089,738 Claim on customers under acceptance credit 3,311,027 169,147 536,784 4,016,958 Credit card receivables 832,116 – 4,211,282 5,043,398 Revolving credit 22,507,965 324,651 700,898 23,533,514 Share margin financing 771,740 – 988,536 1,760,276

Total 82,084,308 6,581,875 81,059,801 169,725,984

2010 Overdrafts 1,880,997 195,654 2,747,230 4,823,881 Term loans/financing 39,164,039 3,324,023 61,038,839 103,526,901 Bills receivable 2,106,949 112,989 241,377 2,461,315 Trust receipts 655,214 44,387 202,349 901,950 Claim on customers under acceptance credit 3,183,525 73,599 567,381 3,824,505 Credit card receivables 618,819 – 4,083,263 4,702,082 Revolving credit 22,240,893 337,651 358,113 22,936,657 Share margin financing 89,351 – 1,190,960 1,280,311 Other loans – 8,183 – 8,183

Total 69,939,787 4,096,486 70,429,512 144,465,785

2011 2010

The CompanyNo rating

RM’000Total

RM’000No rating

RM’000Total

RM’000

Term loans/financing 930 930 1,147 1,147

Total 930 930 1,147 1,147

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(a) Loans, advances and financing (Continued)(i) Loans, advances and financing that are “neither past due nor impaired” (Continued) Credit quality description can be summarised as follows:

Good – There is a high likelihood of the asset being recovered in full and therefore, of no cause for concern to the Group and the Company.

Satisfactory – There is concern over the counterparty’s ability to make payments when due. However, these have not yet converted to actual delinquency and the counterparty is continuing to make payments when due and is expected to settle all outstanding amounts of principal and interest.

No rating – Refers to counterparties that do not satisfy the criteria to be rated internally. These include sovereigns, individuals, schools, non-government organisations, cooperatives and others.

(ii) Loans, advances and financing that are “past due but not impaired” The Group considers an asset as past due when any payment due under strict contractual terms is received late or missed.

However, loans, advances and financing which are less than 90 days past due, are not yet considered to be impaired unless there are impairment triggers available to indicate otherwise.

An age analysis of loans, advances and financing that are “past due but not impaired” is set out below:

The Group

Up to1 monthRM’000

> 1 to 3monthsRM’000

TotalRM’000

2011 Overdrafts 551,157 86,958 638,115 Term loans/financing 7,688,549 3,201,372 10,889,921 Bills receivable 44,434 18,585 63,019 Trust receipts 10,141 2,630 12,771 Claim on customers under acceptance credit 5,276 5,073 10,349 Credit card receivables 301,241 142,737 443,978 Revolving credit 44,090 96,868 140,958 Share margin financing 62,222 – 62,222

Total 8,707,110 3,554,223 12,261,333

2010 Overdrafts 568,458 106,749 675,207 Term loans/financing 7,989,402 3,695,274 11,684,676 Bills receivable 35,994 – 35,994 Trust receipts 12,762 6,157 18,919 Claim on customers under acceptance credit 43,898 16,652 60,550 Credit card receivables 111,095 62,274 173,369 Revolving credit 55,842 68,990 124,832

Total 8,817,451 3,956,096 12,773,547

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(a) Loans, advances and financing (Continued)(iii) Impaired loans, advances and financing

The Group2011

RM’0002010

RM’000

Total gross impaired loans 9,804,681 10,284,379 Less: Impairment allowances (4,784,613) (6,507,183)

Total net impaired loans 5,020,068 3,777,196

Refer to Note 8(vii) and Note 8(viii) for analysis of impaired loans, advances and financing by economic purpose and geographical distribution.

(b) Financial investments at fair value through profit or loss and financial investments Financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments held-to-

maturity are summarised as follows:

The Group2011

Neither pass due nor

impaired(i)

RM’000Impaired

RM’000

Total gross amountRM’000

Financial investments at fair value through profit or loss – Financial assets held for trading – Money market instruments 8,311,274 – 8,311,274 – Quoted securities 821,119 – 821,119 – Unquoted securities 3,248,744 8,000 3,256,744 Financial investments available-for-sale – Money market instruments 938,527 – 938,527 – Quoted securities 3,178,770 – 3,178,770 – Unquoted securities 8,007,713 351,421 8,359,134 Financial investments held-to-maturity – Money market instruments 2,845,850 – 2,845,850 – Quoted securities 4,199,903 5,228 4,205,131 – Unquoted securities 9,832,730 81,695 9,914,425

Total 41,384,630 446,344 41,830,974

Less: Impairment allowance * (281,350)

Total net amount 41,549,624

* Impairment allowance represents allowance made against financial assets that have been impaired

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(b) Financial investments at fair value through profit or loss and financial investments (Continued) Financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments held-to-

maturity are summarised as follows (Continued):

The Group2010

Neither pass due nor

impaired(i)

RM’000Impaired

RM’000

Total gross amountRM’000

Financial investments at fair value through profit or loss – Financial assets held for trading – Money market instruments 10,434,610 – 10,434,610 – Quoted securities 1,614,716 – 1,614,716 – Unquoted securities 2,875,587 – 2,875,587 – Financial assets designated at fair value through profit or loss – Money market instruments 449,881 – 449,881 – Unquoted securities 265,410 – 265,410 Financial investments available-for-sale – Money market instruments 813,236 – 813,236 – Quoted securities 2,660,146 – 2,660,146 – Unquoted securities 6,262,887 430,402 6,693,289 Financial investments held-to-maturity – Money market instruments 1,988,979 – 1,988,979 – Quoted securities 1,837,739 5,139 1,842,878 – Unquoted securities 10,219,113 114,805 10,333,918

Total 39,422,304 550,346 39,972,650

Less: Impairment allowance * (300,265)

Total net amount 39,672,385

* Impairment allowance represents allowance made against financial assets that have been impaired

There were no financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments held-to-maturity that are “past due but not impaired” as at 31 December 2011 and 31 December 2010 for the Group.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(b) Financial investments at fair value through profit or loss and financial investments (Continued)(i) Financial investments at fair value through profit or loss and financial investments that are “neither past due nor

impaired” The table below presents an analysis of financial investments at fair value through profit or loss and financial investments that

are “neither past due nor impaired”, based on rating by major credit rating agencies:

The Group

Sovereign(no rating)

RM’000

Investmentgrade

(AAA to BBB-)RM’000

Non investment

grade(BB+ and

below)RM’000

No ratingRM’000

TotalRM’000

2011 Financial investments at fair value through profit or loss – Financial assets held for trading – Money market instruments 5,398,744 2,866,472 – 46,058 8,311,274 – Quoted securities 515,936 305,183 – – 821,119 – Unquoted securities 250,201 2,885,354 3,533 109,656 3,248,744 Financial investments available-for-sale – Money market instruments 632,996 305,531 – – 938,527 – Quoted securities 2,805,641 373,129 – – 3,178,770 – Unquoted securities 1,536,998 5,985,300 67,933 417,482 8,007,713 Financial investments held-to-maturity – Money market instruments 2,508,470 337,380 – – 2,845,850 – Quoted securities 3,614,907 579,768 5,228 – 4,199,903 – Unquoted securities 1,449,759 6,031,005 59,906 2,292,060 9,832,730

Total 18,713,652 19,669,122 136,600 2,865,256 41,384,630

2010 Financial investments at fair value through profit or loss – Financial assets held for trading – Money market instruments 8,046,419 2,265,032 – 123,159 10,434,610 – Quoted securities 1,557,186 57,525 – 5 1,614,716 – Unquoted securities 231,610 2,068,346 48,086 527,545 2,875,587 – Financial assets designated at fair value through profit or loss – Money market instruments 427,345 22,536 – – 449,881 – Unquoted securities – 244,786 20,624 – 265,410 Financial investments available-for-sale – Money market instruments 664,165 149,071 – – 813,236 – Quoted securities 2,635,565 24,581 – – 2,660,146 – Unquoted securities 1,269,748 4,687,228 90,186 215,725 6,262,887 Financial investments held-to-maturity – Money market instruments 1,734,089 254,890 – – 1,988,979 – Quoted securities 1,185,920 651,819 – – 1,837,739 – Unquoted securities 2,454,010 5,571,276 55,670 2,138,157 10,219,113

Total 20,206,057 15,997,090 214,566 3,004,591 39,422,304

Securities with no ratings consists of government securities, credit-linked notes and private debt securities.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(c) Other financial assets Other financial assets of the Group and the Company are summarised as follows:

The Group

Neither past due nor

impaired(i)

RM’000

Past due but not impaired

(ii)RM’000

ImpairedRM’000

Total gross amountRM’000

2011 Cash and short term funds 31,531,803 – – 31,531,803 Reverse repurchase agreements 4,230,482 – – 4,230,482 Deposits and placements with banks and other financial institutions 4,174,012 – – 4,174,012 Other assets 5,932,739 187,079 94,483 6,214,301 Derivative financial instruments 4,274,073 – – 4,274,073

Total 50,143,109 187,079 94,483 50,424,671

Less: Impairment allowance* (83,177)

Total net amount 50,341,494

2010 Cash and short term funds 24,151,160 – – 24,151,160 Reverse repurchase agreements 3,804,662 – – 3,804,662 Deposits and placements with banks and other financial institutions 11,745,823 – – 11,745,823 Other assets 6,030,793 181,492 80,043 6,292,328 Derivative financial instruments 3,577,155 – – 3,577,155

Total 49,309,593 181,492 80,043 49,571,128

Less: Impairment allowance* (76,808)

Total net amount 49,494,320

* Impairment allowance represents allowance made against financial assets that have been impaired

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(c) Other financial assets (Continued) Other financial assets of the Group and the Company are summarised as follows (Continued):

The Company

Neither past due nor

impaired(i)

RM’000Impaired

RM’000

Total gross amountRM’000

2011 Cash and short term funds 316,828 – 316,828 Other assets 21,959 – 21,959 Derivative financial instruments 17,459 – 17,459 Amount owing by subsidiaries 4,811 775 5,586

Total 361,057 775 361,832

Less: Impairment allowance * (775)

Total net amount 361,057

2010 Cash and short term funds 529,825 – 529,825 Other assets 8,509 – 8,509 Derivative financial instruments 5,676 – 5,676 Amount owing by subsidiaries 19,267 805 20,072

Total 563,277 805 564,082

Less: Impairment allowance * (805)

Total net amount 563,277

* Impairment allowance represents allowance made against financial assets that have been impaired

There were no other credit risk financial assets that are “past due but not impaired” as at 31 December 2011 and 31 December 2010 for the Company.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(c) Other financial assets (Continued)(i) Other financial assets that are “neither past due nor impaired” The tables below present an analysis of other financial assets that are “neither past due nor impaired”, based on rating by major

credit rating agencies:

The Group

Sovereign(no rating)

RM’000

Investmentgrade

(AAA to BBB-)RM’000

Non investment

grade(BB+ and

below)RM’000

No ratingRM’000

TotalRM’000

2011 Cash and short term funds 21,858,134 9,222,064 28,418 423,187 31,531,803 Reverse repurchase agreements 3,048,774 1,181,708 – – 4,230,482 Deposits and placements with banks and other financial institutions 1,612,898 2,545,605 730 14,779 4,174,012 Other assets 240,684 477,296 – 5,214,759 5,932,739 Derivative financial instruments 90,079 3,692,293 227,636 264,065 4,274,073

Total 26,850,569 17,118,966 256,784 5,916,790 50,143,109

2010 Cash and short term funds 15,291,289 7,959,882 82,522 817,467 24,151,160 Reverse repurchase agreements 3,231,252 573,410 – – 3,804,662 Deposits and placements with banks and other financial institutions 3,648,907 8,023,390 18,575 54,951 11,745,823 Other assets 267,457 381,869 405 5,381,062 6,030,793 Derivative financial instruments 20,780 3,094,199 83,894 378,282 3,577,155

Total 22,459,685 20,032,750 185,396 6,631,762 49,309,593

The Company

Investment grade

(AAA to BBB-)RM’000

No ratingRM’000

TotalRM’000

2011 Cash and short term funds 316,828 – 316,828 Other assets 21,915 44 21,959 Derivative financial instruments 17,459 – 17,459 Amount owing by subsidiaries 23 4,788 4,811

Total 356,225 4,832 361,057

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.1 Credit risk (Continued)53.1.3 Credit quality of financial assets (Continued)

(c) Other financial assets (Continued)(i) Other financial assets that are “neither past due nor impaired” (Continued)

The Company

Investment grade

(AAA to BBB-)RM’000

No ratingRM’000

TotalRM’000

2010 Cash and short term funds 529,825 – 529,825 Other assets 8,410 99 8,509 Derivative financial instruments 5,676 – 5,676 Amount owing by subsidiaries 18,446 821 19,267

Total 562,357 920 563,277

(ii) Other financial assets that are “past due but not impaired” An age analysis of the other financial assets of the Group that are “past due but not impaired” as at 31 December 2011 and

31 December 2010 are set out as below.

Past due but not impaired

The Group

Up to1 monthRM’000

> 1 to 3monthsRM’000

TotalRM’000

2011 Other assets 62,416 124,663 187,079

2010 Other assets 126,330 55,162 181,492

53.1.4 Repossessed collateral The Group and the Company obtained assets by taking possession of collateral held as security as at year ended 31 December are as

follows:

The GroupCarrying amountRM’000

The CompanyCarrying amountRM’000

2011 Nature of assets Industrial and residential properties and development land 167,765 –

2010 Nature of assets Industrial and residential properties and development land 237,620 –

Repossessed collaterals are sold as soon as practicable. The Group does not utilise the repossessed collaterals for its business use.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk Market risk is defined as the potential change in market value of trading and investment securities held by the Group arising from adverse changes

to market parameters such as interest rates/benchmark rates, credit spreads, foreign exchange rates, equity prices, commodity prices and volatility.

Market Risk Management The function of RMA Team in CIMB is to measure and control market risk of the Group through robust measurement and the setting of limits

while facilitating business growth within a controlled and transparent risk management framework. Here, the CaR framework is employed to measure market risk where CaR represents the worst expected loss in portfolio value under normal market conditions over a specific time interval at a given confidence level. The Group has adopted a historical simulation approach to compute CaR. This approach assesses potential loss in portfolio value based on the last 500 daily historical movements of relevant market parameters and 99% confidence level at 1-day holding period.

Broadly, the Group is exposed to four major types of market risk namely equity risk, interest/benchmark rate risk, foreign exchange risk and commodity risk. Each business unit is allocated CaR limits for each type of market risk undertaken for effective risk monitoring and control. These limits are approved by the GRC and utilisation of limits is monitored on a daily basis. Daily risk reports are sent to the relevant traders, Group Treasury’s Market Risk Team and Risk Middle Office (RMO) within GRM. The head of each business unit is accountable for all market risk under his/her purview. Any excession will be escalated to management in accordance to the Group’s exception management procedures.

In addition to daily monitoring of CaR usage, on a monthly basis, all market exposures and CaR of the Group will be summarised and submitted to GRC and BRC for its perusal. The usage of market CaR by risk type based on 1-day holding period of the Group’s trading exposures as at 31 December 2011 is shown in Note 53.2.1.

Although historical simulation provides a reasonable estimate of market risk, this approach relies heavily on historical daily price movements of the market parameter of interest. Hence, the resulting market CaR is exposed to the danger that price and rate changes over the stipulated time horizon might not be typical. Example, if the past 500 daily price movements were observed over a period of exceptionally low volatility, then the CaR computed would understate the risk of the portfolio and vice versa.

In order to ensure historical simulation gives an adequate estimation of market CaR, backtesting of the historical simulation approach is performed annually. Backtesting involves comparing the derived 1-day CaR against the hypothetical change in portfolio value assuming end-of-day positions in the portfolio were to remain unchanged. The number of exceptions would be the number of times the difference in hypothetical value exceeds the computed 1-day CaR.

The Group also complements CaR with stress testing exercises to capture event risk that are not observed in the historical time period selected to compute CaR. Stress testing exercise at the group-wide level involves assessing potential losses to the Group’s market risk exposures under pre-specified scenarios. This type of scenario analysis is performed twice yearly. Scenarios are designed in collaboration with the Regional Research Team to reflect extreme and yet highly plausible stress scenarios. Stress test results are presented to the GRC to provide senior management with an overview of the impact to the Group if such stress scenarios were to materialise.

In addition to the above, RMO under GRM undertakes the monitoring and oversight process at Group Treasury and Equity Market & Derivatives trading floors, which include reviewing treasury trading strategy, analysing positions and activities vis-à-vis changes in the financial markets, monitoring limits usage, assessing limits adequacy and verifying transaction prices.

RMO also provides accurate and timely valuation of the Group’s position on a daily basis. Exposures are valued using market price (Mark-to-Market) or a pricing model (Mark-to-Model) (collectively known as ‘MTM’) where appropriate. The MTM process is carried out on all positions classified as Held for Trading as well as Available for Sale on a daily basis for the purpose of meeting independent price verification requirements, calculation of profits or losses as well as to confirm that margins required are met.

Treasury products approval processes will be led by RMO to ensure the bank is operational ready before launching. All new products are assessed by components and in totality to ensure financial risks are accurately identified, monitored and effectively managed.

All valuation methods and models used are documented and validated by the Quantitative Analysts to assess its applicability to market conditions. The process includes verification of the rate sources, parameters, assumptions modeling approach and its implementations. Existing valuation models are reviewed at least on a yearly basis to ensure that they remain relevant to changing market conditions. Backtest of newly approved or revised models may be conducted to assess the appropriateness of the model and input data used.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.1 CaR The usage of market CaR by risk type based on 1-day holding period of the Group’s trading exposures are set out as below:

The Group2011

RM’0002010

RM’000

CaR (99%) Foreign exchange risk 7,540 9,092 Interest rate risk 11,959 13,950 Equity risk 1,920 2,151 Commodity risk 136 –

Total 21,555 25,193

Total shareholder’s fund 25,936,470 23,229,966 Percentage of shareholder’s fund 0.08% 0.11%

53.2.2 Interest rate risk Interest rate risk relates to the potential adverse impact on net interest income arising from changes in market rates. One of the primary

sources of interest rate risk is the repricing mismatches between interest earning assets and interest bearing liabilities. Interest rate risk is measured and reported at various levels through various techniques including Earnings-at-Risk (EaR).

(a) The table below summarise the Group’s and the Company’s financial assets and financial liabilities at their full carrying amounts analysed by the earlier of contractual repricing or maturity dates.

Non-trading book

The Group2011 Note

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

Trading book

RM’000Total

RM’000

Financial assetsCash and short-term funds 30,855,563 – – – – – 3,813,282 – 34,668,845Reverse repurchase agreements 2,110,638 1,532,314 – 580,483 – – 7,047 – 4,230,482Deposits and placements with banks and other financial institutions 1,488,828 1,855,644 648,376 63,769 7,069 3,377 106,949 – 4,174,012Financial assets held for trading – – – – – – – 13,665,700 13,665,700Financial investments available-for-sale (i) 263,990 507,618 1,045,418 870,466 3,683,577 5,565,361 1,836,789 – 13,773,219Financial investments held-to-maturity (i) 1,108,620 1,617,190 365,338 959,101 8,775,651 3,997,007 95,877 – 16,918,784Derivative financial instruments– Trading derivatives – – – – – – – 4,016,891 4,016,891– Hedging derivatives – – – 319 215,525 41,338 – – 257,182Loans, advances and financing (i) 95,408,302 13,680,143 10,488,823 5,462,490 31,956,287 26,842,732 – – 183,838,777Other assets 151,012 – 81,135 55,000 – 110,153 5,700,428 33,396 6,131,124

Total financial assets 131,386,953 19,192,909 12,629,090 7,991,628 44,638,109 36,559,968 11,560,372 17,715,987 281,675,016

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

Non-trading book

The Group2011

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

Trading book

RM’000Total

RM’000

Financial liabilitiesDeposits from customers 145,049,963 25,989,361 12,265,874 12,031,325 4,350,702 1,402,187 20,843,730 – 221,933,142Deposits and placements of banks and other financial institutions 6,165,637 2,486,729 984,210 227,750 1,755,627 1,148,088 196,268 – 12,964,309Repurchase agreements – – 486,918 580,483 – – 545 – 1,067,946Derivative financial instruments– Trading derivatives – – – – – – – 3,744,404 3,744,404– Hedging derivatives 5,580 22,699 9,585 329 24,408 410,286 – – 472,887Bills and acceptances payable 2,612,453 2,992,758 1,321,190 2,135 11,410 – 626,745 – 7,566,691Other liabilities – – – – – – 5,998,154 – 5,998,154Other borrowings 579,936 79,077 1,101,495 120,243 2,884,884 539,886 18,511 – 5,324,032Subordinated notes – 131,848 – – 4,142,278 6,988,110 155,744 – 11,417,980Bonds – – – – 521,225 – – – 521,225Non-cumulative guaranteed and redeemable preference shares – – – – 774,122 100,000 6,894 – 881,016

Total financial liabilities 154,413,569 31,702,472 16,169,272 12,962,265 14,464,656 10,588,557 27,846,591 3,744,404 271,891,786

Net interest sensitivity gap for items recognised in the statements of financial position (23,026,616) (12,509,563) (3,540,182) (4,970,637) 30,173,453 25,971,411 13,971,583

Net interest sensitivity gap for items not recognised in the statements of financial positionFinancial guarantees – – – – – – 4,155,355 – 4,155,355Credit related commitments and contingencies – – – – – – 49,465,662 – 49,465,662Treasury related commitments and contingencies (hedging) 126,595 631,896 207,459 20,911 4,503,207 8,802,773 – – 14,292,841

126,595 631,896 207,459 20,911 4,503,207 8,802,773 53,621,017 – 67,913,858

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

Non-trading book

The Group2010 Note

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

Trading book

RM’000Total

RM’000

Financial assetsCash and short-term funds 19,137,526 – – – – – 8,047,734 – 27,185,260Reverse repurchase agreements 2,741,383 1,001,833 405 – – – 61,041 – 3,804,662Deposits and placements with banks and other financial institutions 2,773,679 5,369,855 2,355,925 908,213 6,000 138,758 193,393 – 11,745,823Financial assets held for trading – – – – – – – 16,221,146 16,221,146Financial assets designated at fair value through profit or loss (i) 1,001 4,971 7,813 22,206 232,050 447,250 146,159 – 861,450Financial investments available-for-sale (i) 217,492 426,928 170,975 679,744 4,094,445 4,278,284 1,790,834 – 11,658,702Financial investments held-to-maturity (i) 261,796 581,133 498,680 1,648,006 7,175,661 3,953,027 1,960 – 14,120,263Derivative financial instruments– Trading derivatives – – – – – – – 3,411,612 3,411,612– Hedging derivatives 2,992 – 1,343 26,723 123,349 11,136 – – 165,543Loans, advances and financing (i) 91,093,226 26,210,764 5,936,019 4,091,115 13,126,702 18,723,559 – – 159,181,385Other assets 840 – 81,756 – 264,629 111,018 5,757,277 – 6,215,520

Total financial assets 116,229,935 33,595,484 9,052,916 7,376,007 25,022,836 27,663,032 15,998,398 19,632,758 254,571,366

Financial liabilitiesDeposits from customers 110,526,194 40,884,713 9,406,760 10,949,502 4,932,562 1,143,779 22,002,154 – 199,845,664Deposits and placements of banks and other financial institutions 5,398,778 2,673,116 2,106,639 1,453,846 1,217,248 185,010 57,520 – 13,092,157Repurchase agreements – 33,087 – – – – – – 33,087Derivative financial instruments– Trading derivatives – – – – – – – 3,489,798 3,489,798– Hedging derivatives – – – – 61,516 197,202 – – 258,718Bills and acceptances payable 1,774,077 1,559,807 524,598 184,088 1,148 – 488,728 – 4,532,446Amount due to Cagamas Berhad – 45,416 62,107 – – – – – 107,523Other liabilities – – – – – – 7,650,947 – 7,650,947Other borrowings 902,507 239,284 77,425 580,919 1,808,786 174,666 – – 3,783,587Subordinated notes – – – – 2,505,756 7,113,653 55,931 – 9,675,340Bonds – – 382,527 – – – 41,455 – 423,982Non-cumulative guaranteed and redeemable preference shares – – – – 760,162 100,000 – – 860,162

Total financial liabilities 118,601,556 45,435,423 12,560,056 13,168,355 11,287,178 8,914,310 30,296,735 3,489,798 243,753,411

Net interest sensitivity gap for items recognised in the statements of financial position (2,371,621) (11,839,939) (3,507,140) (5,792,348) 13,735,658 18,748,722 16,142,960

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

Non-trading book

The Group2010 Note

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

Trading book

RM’000Total

RM’000

Net interest sensitivity gap for items not recognised in the statements of financial positionFinancial guarantees – – – – – – 4,399,652 – 4,399,652Credit related commitments and contingencies – – – – – – 47,049,824 – 47,049,824Treasury related commitments and contingencies (hedging) 853,500 – 553,500 65,611 3,919,265 8,253,500 – – 13,645,376

853,500 – 553,500 65,611 3,919,265 8,253,500 51,449,476 – 65,094,852

(i) The interest rate risk for financial assets designated at fair value through profit or loss, financial investments available-for-sale, financial investments held-to-maturity and loans, advances and financing of the Group are further analysed by classes of financial assets as follows:

Non-trading book

The Group2011

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

TotalRM’000

Financial investments available-for-sale– Money market instruments 122,205 – 15,014 50,365 335,344 406,382 9,217 938,527– Quoted securities 109,362 5,040 – 208,120 1,075,626 1,741,245 480,684 3,620,077– Unquoted securities 32,423 502,578 1,030,404 611,981 2,272,607 3,417,734 1,346,888 9,214,615Financial investments held-to-maturity– Money market instruments 9,986 – 100,040 150,000 2,319,563 240,453 25,792 2,845,834– Quoted securities 943,937 831,514 105,199 243,210 1,754,163 285,171 31,720 4,194,914– Unquoted securities 154,697 785,676 160,099 565,891 4,701,925 3,471,383 38,365 9,878,036Loans, advances and financing– Overdrafts 5,431,313 – – – – – – 5,431,313– Term loans/financing 72,972,793 6,395,806 5,838,479 1,489,653 27,155,356 24,787,063 – 138,639,150– Bills receivable 2,016,758 1,049,666 447,968 76,699 – 5,271 – 3,596,362– Trust receipts 511,001 265,941 333,379 6,165 8,069 – – 1,124,555– Claim on customers under acceptance credit 1,988,191 1,521,319 591,051 1,815 – – – 4,102,376– Credit card receivables 5,420,554 – – – – – – 5,420,554– Revolving credit 6,074,625 4,342,565 3,197,064 3,867,922 4,224,403 1,987,849 – 23,694,428– Share margin financing 993,067 104,846 80,882 20,236 568,459 62,549 – 1,830,039

Total 96,780,912 15,804,951 11,899,579 7,292,057 44,415,515 36,405,100 1,932,666 214,530,780

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

(i) The interest rate risk for financial assets designated at fair value through profit or loss, financial investments available-for-sale, financial investments held-to-maturity and loans, advances and financing of the Group are further analysed by classes of financial assets as follows (Continued):

Non-trading book

The Group2010

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

TotalRM’000

Financial assets designated at fair value through profit or loss– Money market instruments – – – – 70,770 379,111 – 449,881– Quoted securities – – – – – – 92,434 92,434– Unquoted securities 1,001 4,971 7,813 22,206 161,280 68,139 53,725 319,135Financial investments available-for-sale– Money market instruments – – – 27,427 330,020 455,789 – 813,236– Quoted securities 48,277 102,565 30,657 211,482 1,028,298 1,238,651 637,827 3,297,757– Unquoted securities 169,215 324,363 140,318 440,835 2,736,127 2,583,844 1,153,007 7,547,709Financial investments held-to-maturity– Money market instruments – 9,948 – 149,979 1,829,052 – – 1,988,979– Quoted securities 69,492 – 199,099 771,170 701,507 92,337 – 1,833,605– Unquoted securities 192,304 571,185 299,581 726,857 4,645,102 3,860,690 1,960 10,297,679Loans, advances and financing– Overdrafts 5,573,305 – – – – – – 5,573,305– Term loans/financing 64,630,082 12,129,944 4,914,145 3,485,972 12,947,216 18,602,276 – 116,709,635– Bills receivable 1,169,990 698,576 245,352 377,597 – – – 2,491,515– Trust receipts 448,097 162,050 149,644 181,334 1,528 – – 942,653– Claim on customers under acceptance credit 1,338,550 2,014,934 586,984 2,919 – – – 3,943,387– Credit card receivables 4,161,242 694,098 6,419 – – – – 4,861,759– Revolving credit 12,632,948 10,414,527 21,988 14,844 177,958 113,100 – 23,375,365– Share margin financing 1,139,012 96,635 11,487 28,449 – – – 1,275,583– Other loans – – – – – 8,183 – 8,183

Total 91,573,515 27,223,796 6,613,487 6,441,071 24,628,858 27,402,120 1,938,953 185,821,800

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

(i) The interest rate risk for financial assets designated at fair value through profit or loss, financial investments available-for-sale, financial investments held-to-maturity and loans, advances and financing of the Company are further analysed by classes of financial assets as follows (Continued):

Non-trading book

The Company2011

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

Trading book

RM’000Total

RM’000

Financial assetsCash and short-term funds 311,709 – – – – – 5,119 – 316,828Derivative financial instruments– Trading derivatives – – – – – – – 13,188 13,188– Hedging derivatives – – – – 4,271 – – – 4,271Loans, advances and financing– Term loans/financing – 2 – – 42 879 7 – 930Other assets 21,860 – – – – – 99 – 21,959Amount due from subsidiaries – – – – – – 4,811 – 4,811

Total financial assets 333,569 2 – – 4,313 879 10,036 13,188 361,987

Financial liabilitiesDerivative financial instruments– Trading derivatives – – – – – – – 4,164 4,164Other liabilities – – – – – – 3,242 – 3,242Other borrowings 99,757 – 1,000,000 – 1,658,648 500,000 7,647 – 3,266,052Subordinated notes – – – – – 2,130,000 11,655 – 2,141,655

Total financial liabilities 99,757 – 1,000,000 – 1,658,648 2,630,000 22,544 4,164 5,415,113

Net interest sensitivity gap for items recognised in the statements of financial position 233,812 2 (1,000,000) – (1,654,335) (2,629,121) (9,024)

Net interest sensitivity gap for items not recognised in the statements of financial positionTreasury related commitments and contingencies – – – – 150,000 – – – 150,000

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

(i) The interest rate risk for financial assets designated at fair value through profit or loss, financial investments available-for-sale, financial investments held-to-maturity and loans, advances and financing of the Company are further analysed by classes of financial assets as follows (Continued):

Non-trading book

The Company2010

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-interest

sensitiveRM’000

Trading book

RM’000Total

RM’000

Financial assetsCash and short-term funds 515,468 – – – – – 14,358 – 529,826Derivative financial instruments– Hedging derivatives – – – – 5,676 – – – 5,676Loans, advances and financing– Term loans/financing – – – 20 88 1,039 – – 1,147Other assets – – – – 8,410 – 99 – 8,509Amount due from subsidiaries – – – – – – 19,267 – 19,267

Total financial assets 515,468 – – 20 14,174 1,039 33,724 – 564,425

Financial liabilitiesDerivative financial instruments– Trading derivatives – – – – – – – 9,363 9,363Other liabilities – – – – – – 1,463 – 1,463Other borrowings – – – – 1,650,468 – 13,880 – 1,664,348Subordinated notes – – – – – 2,130,000 – – 2,130,000Amount owing to subsidiaries – – – – – – 147 – 147

Total financial liabilities – – – – 1,650,468 2,130,000 15,490 9,363 3,805,321

Net interest sensitivity gap for items recognised in the statements of financial position 515,468 – – 20 (1,636,294) (2,128,961) (9,363)

Net interest sensitivity gap for items not recognised in the statements of financial positionTreasury related commitments and contingencies – – – – 150,000 – – – 150,000

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.2 Interest rate risk (Continued)

(b) Sensitivity of profit The table below shows the sensitivity of the Group and the Company’s banking book to movement in interest rates:

The Group The Company

+100 basic points

RM’000

–100 basic points

RM’000

+100 basic points

RM’000

–100 basic points

RM’000

2011 Impact to profit (after tax) (281,484) 281,484 (3,008) 3,008

2010 Impact to profit (after tax) (117,636) 117,636 4,001 (4,001)

Sensitivity is measured using the EaR methodology. The treatments and assumptions applied are based on the contractual repricing and remaining maturity of the products, whichever is earlier. Items with indefinite repricing maturity are treated based on the earliest possible repricing date. The actual dates may vary from the repricing profile allocated due to factors such as pre-mature withdrawals, prepayment and others.

A 100 bps parallel rate movement is applied to the yield curve to model the potential impact on profit in the next 12 months from policy rate change.

The projection assumes that interest rates of all maturities move by the same amount and, therefore, do not reflect the potential impact on profit of some rates changing while others remain unchanged. The projections also assume that all other variables are held constant and are based on a constant reporting date position and that all positions run to maturity.

(c) Sensitivity of reserves The table below shows the sensitivity of the Group’s banking book to movement in interest rates:

The Group

+100 basic points

2011RM’000

–100 basic points

2011RM’000

+100 basic points

2010RM’000

–100 basic points

2010RM’000

Impact to revaluation reserve-financial investments available-for-sale (554,651) 554,651 (391,174) 391,174

A 100 bps parallel rate movement is applied to the yield curve to model the potential impact on reserves in the next 12 months from changes in risk free rates. The impact on reserves arises from changes in valuation of financial investments available-for-sale following movements in risk free rates.

The projection assumes that all other variables are held constant. It also assumes a constant reporting date position and that all positions run to maturity.

The above sensitivities of profit and reserves do not take into account the effects of hedging and do not incorporate actions that the Group would take to mitigate the impact of this interest rate risk. In practice, the Group proactively seeks to mitigate the effect of prospective interest movements.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.3 Foreign exchange risk The Group and Company are exposed to transactional foreign exchange exposures which are exposures on assets and liabilities

denominated in currencies other than the functional currency of the transacting entity.

The Group and the Company take minimal exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The Group manage its exposure to foreign exchange currencies at each entity level.

(a) The table below summarises the financial assets, financial liabilities, items not recognised in the statements of financial position and net open position by currency of the Group.

The Group2011

MYRRM’000

IDRRM’000

THBRM’000

SGDRM’000

USDRM’000

AUDRM’000

GBPRM’000

JPYRM’000

OthersRM’000

Total non-MYR

RM’000

Grand total

RM’000

Items recognised in the

statements of financial

position

Financial assetsCash and short-term funds 22,344,105 4,050,284 379,541 953,658 5,151,103 151,497 385,469 157,347 1,095,841 12,324,740 34,668,845Reverse repurchase agreements 3,685,282 – – 135,796 409,404 – – – – 545,200 4,230,482Deposits and placements with banks and other financial institutions 1,487,024 1,447,654 59,749 293 1,138,141 – – – 41,151 2,686,988 4,174,012Financial assets held for trading– Money market instruments 5,282,946 34,806 – 2,825,336 168,186 – – – – 3,028,328 8,311,274– Quoted securities 579,918 878,082 224,008 9,215 333,210 1,839 – 421 4,916 1,451,691 2,031,609– Unquoted securities 1,779,889 49,605 9,673 456,639 1,027,011 – – – – 1,542,928 3,322,817Financial investments available-for-sale– Money market instruments 754,995 – – – 183,532 – – – – 183,532 938,527– Quoted securities 138,883 2,321,510 1,158,549 1,135 – – – – – 3,481,194 3,620,077– Unquoted securities 7,504,740 182,852 82,851 8,129 1,110,870 28,863 – – 296,310 1,709,875 9,214,615Financial investments held-to-maturity– Money market instruments 2,355,692 – – 235,834 254,308 – – – – 490,142 2,845,834– Quoted securities – 2,358,942 1,835,930 – 42 – – – – 4,194,914 4,194,914– Unquoted securities 8,331,684 – 21,552 1,085,214 439,586 – – – – 1,546,352 9,878,036Derivative financial instruments– Trading derivatives 2,794,775 12,669 167,050 34,526 878,551 10,071 3,430 697 115,122 1,222,116 4,016,891– Hedging derivatives 120,514 28,575 – – 108,093 – – – – 136,668 257,182Loans, advances and financing– Overdrafts 4,628,620 – 669,976 92,541 40,176 – – – – 802,693 5,431,313– Term loans/financing 96,139,981 19,411,157 7,554,702 6,939,612 6,986,028 414,390 510,635 190,360 492,285 42,499,169 138,639,150– Bills receivable 692,400 1,454 2,728,202 8,443 151,925 – 2,253 79 11,606 2,903,962 3,596,362– Trust receipts 376,396 – 368,054 35,671 329,897 – 132 2,257 12,148 748,159 1,124,555– Claim on customers under acceptance credit 3,265,824 203,872 5,058 – 590,798 – – 32,930 3,894 836,552 4,102,376– Credit card receivables 4,068,576 915,976 – 436,002 – – – – – 1,351,978 5,420,554– Revolving credit 3,624,567 14,600,429 54,618 400,541 4,631,875 – 367,137 – 15,261 20,069,861 23,694,428– Share margin financing 497,270 912,098 52,712 367,959 – – – – – 1,332,769 1,830,039Other assets 4,188,180 1,164,878 171,236 199,274 364,161 4,096 2,046 1,012 36,241 1,942,944 6,131,124

174,642,261 48,574,843 15,543,461 14,225,818 24,296,897 610,756 1,271,102 385,103 2,124,775 107,032,755 281,675,016

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.3 Foreign exchange risk (Continued)

(a) The table below summarises the financial assets, financial liabilities, items not recognised in the statements of financial position and net open position by currency of the Group (Continued).

The Group2011

MYRRM’000

IDRRM’000

THBRM’000

SGDRM’000

USDRM’000

AUDRM’000

GBPRM’000

JPYRM’000

OthersRM’000

Total non-MYR

RM’000

Grand total

RM’000

Financial liabilitiesDeposits from customers 141,717,289 37,400,917 10,188,843 9,650,744 19,558,425 557,636 289,260 164,511 2,405,517 80,215,853 221,933,142Deposits and placements of banks and other financial institutions 2,668,604 531,513 150,413 3,734,977 4,127,814 374,023 776,488 2,877 597,600 10,295,705 12,964,309Repurchase agreement 581,027 – – 486,919 – – – – – 486,919 1,067,946Derivatives financial instruments– Trading derivatives 2,550,375 11,183 151,880 39,228 855,816 11,918 3,339 813 119,852 1,194,029 3,744,404– Hedging derivatives 398,343 29,744 1,806 – 41,492 – – – 1,502 74,544 472,887Bills and acceptances payable 3,218,810 172,159 3,479,785 72,196 586,901 – 16 32,930 3,894 4,347,881 7,566,691Other liabilities 3,564,865 1,298,825 230,815 484,633 332,787 2,554 9,495 934 73,246 2,433,289 5,998,154Other borrowings 3,357,129 755,020 – 277,553 933,376 648 – 306 – 1,966,903 5,324,032Bonds – 521,225 – – – – – – – 521,225 521,225Subordinated notes 9,854,298 1,065,370 364,578 – 133,734 – – – – 1,563,682 11,417,980Non-cumulative guaranteed and redeemable preference shares 881,016 – – – – – – – – – 881,016

168,791,756 41,785,956 14,568,120 14,746,250 26,570,345 946,779 1,078,598 202,371 3,201,611 103,100,030 271,891,786

Items not recognised in the

statements of financial

position

Financial guarantees 808,854 138,392 336,117 1,854,479 657,033 – 66,155 11,607 282,718 3,346,501 4,155,355Credit related commitments and contingencies 39,046,453 902,669 775,680 2,964,458 4,696,487 210,899 192,184 57,248 619,584 10,419,209 49,465,662

39,855,307 1,041,061 1,111,797 4,818,937 5,353,520 210,899 258,339 68,855 902,302 13,765,710 53,621,017

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.3 Foreign exchange risk (Continued)

(a) The table below summarises the financial assets, financial liabilities, items not recognised in the statements of financial position and net open position by currency of the Group (Continued).

The Group2010

MYRRM’000

IDRRM’000

THBRM’000

SGDRM’000

USDRM’000

AUDRM’000

GBPRM’000

JPYRM’000

OthersRM’000

Total non-MYR

RM’000

Grand total

RM’000

Items recognised in the

statements of financial

position

Financial assetsCash and short-term funds 15,802,289 3,725,176 430,148 205,260 5,693,233 267,628 51,355 166,525 843,646 11,382,971 27,185,260Reverse repurchase agreements 2,680,216 – 1,014,376 10,901 99,169 – – – – 1,124,446 3,804,662Deposits and placements with banks and other financial institutions 4,162,034 2,740,563 60,687 – 3,697,174 125,661 383,508 – 576,196 7,583,789 11,745,823Financial assets held for trading– Money market instruments 8,250,199 – – 2,061,253 123,158 – – – – 2,184,411 10,434,610– Quoted securities 859,706 1,662,336 13,904 74,476 262,462 8,571 – 195 23,351 2,045,295 2,905,001– Unquoted securities 1,425,305 44,531 – 551,839 859,860 – – – – 1,456,230 2,881,535Financial assets designated at fair value through profit or loss– Money market instruments 449,881 – – – – – – – – – 449,881– Quoted securities 92,434 – – – – – – – – – 92,434– Unquoted securities 319,135 – – – – – – – – – 319,135Financial investments available-for-sale– Money market instruments 813,236 – – – – – – – – – 813,236– Quoted securities 335,840 2,090,905 867,836 1,386 – – – – 1,790 2,961,917 3,297,757– Unquoted securities 6,955,309 98,201 27,475 775 312,935 – – – 153,014 592,400 7,547,709Financial investments held-to-maturity– Money market instruments 1,988,979 – – – – – – – – – 1,988,979– Quoted securities – 275,033 999,621 – 558,951 – – – – 1,833,605 1,833,605– Unquoted securities 8,852,700 – 76,641 759,550 608,788 – – – – 1,444,979 10,297,679Derivative financial instruments– Trading derivatives 2,446,367 32,999 182,447 13,913 697,383 8 297 1,521 36,677 965,245 3,411,612– Hedging derivatives 52,699 – – – 112,844 – – – – 112,844 165,543Loans, advances and financing– Overdrafts 4,860,508 – 623,097 89,700 – – – – – 712,797 5,573,305– Term loans/financing 85,725,269 14,275,973 6,433,347 4,465,598 5,037,542 172,917 72,489 179,643 346,857 30,984,366 116,709,635– Bills receivable 413,126 – 1,866,955 64,260 142,113 – 563 883 3,615 2,078,389 2,491,515– Trust receipts 408,295 – 194,236 12,230 311,408 – 1,939 5,496 9,049 534,358 942,653– Claim on customers under acceptance credit 3,472,378 103,375 5,142 286 306,910 – – 42,765 12,531 471,009 3,943,387– Credit card receivables 3,885,531 686,228 – 290,000 – – – – – 976,228 4,861,759– Revolving credit 3,328,919 14,082,982 51,401 520,924 5,207,356 – 175,114 2,789 5,880 20,046,446 23,375,365– Share margin financing 623,747 136,573 18,815 496,448 – – – – – 651,836 1,275,583– Other loans 8,183 – – – – – – – – – 8,183Other assets 4,402,690 752,465 84,613 432,532 466,397 8,007 5,094 255 63,467 1,812,830 6,215,520

162,614,975 40,707,340 12,950,741 10,051,331 24,497,683 582,792 690,359 400,072 2,076,073 91,956,391 254,571,366

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202Annual Report 2011Financial Statements

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.3 Foreign exchange risk (Continued)

(a) The table below summarises the financial assets, financial liabilities, items not recognised in the statements of financial position and net open position by currency of the Group (Continued).

The Group2010

MYRRM’000

IDRRM’000

THBRM’000

SGDRM’000

USDRM’000

AUDRM’000

GBPRM’000

JPYRM’000

OthersRM’000

Total non-MYR

RM’000

Grand total

RM’000

Financial liabilitiesDeposits from customers 126,537,374 33,774,821 9,653,079 7,803,996 19,693,258 376,561 372,371 192,226 1,441,978 73,308,290 199,845,664Deposits and placements of banks and other financial institutions 6,424,122 323,732 210,436 1,917,625 3,626,405 138,861 354,879 1,712 94,385 6,668,035 13,092,157Repurchase agreements – – – – 33,087 – – – – 33,087 33,087Derivatives financial instruments– Trading derivatives 2,524,166 24,169 131,617 50,185 700,618 1,545 70 201 57,227 965,632 3,489,798– Hedging derivatives 204,090 8,660 2,626 – 43,342 – – – – 54,628 258,718Bills and acceptances payable 2,231,859 89,622 1,824,889 20,053 310,726 – – 42,765 12,532 2,300,587 4,532,446Amount due to Cagamas Berhad 107,523 – – – – – – – – – 107,523Other liabilities 5,743,019 988,567 210,517 315,464 292,033 24,478 8,734 1,049 67,086 1,907,928 7,650,947Other borrowings 1,727,466 267,483 298,920 377,094 1,112,624 – – – – 2,056,121 3,783,587Bonds – – – – 423,982 – – – – 423,982 423,982Subordinated notes 7,900,271 1,145,090 66,240 – 563,739 – – – – 1,775,069 9,675,340Non-cumulative guaranteed and redeemable preference shares 860,162 – – – – – – – – – 860,162

154,260,052 36,622,144 12,398,324 10,484,417 26,799,814 541,445 736,054 237,953 1,673,208 89,493,359 243,753,411

Items not recognised in the

statements of financial

position

Financial guarantees 840,971 737,688 391,287 1,729,865 408,061 563 49,340 – 241,877 3,558,681 4,399,652Credit related commitments and contingencies 36,855,856 541,968 775,643 2,142,432 5,530,191 159,235 228,348 169,435 646,716 10,193,968 47,049,824

37,696,827 1,279,656 1,166,930 3,872,297 5,938,252 159,798 277,688 169,435 888,593 13,752,649 51,449,476

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.3 Foreign exchange risk (Continued)

(a) The table below summarises the financial assets, financial liabilities, items not recognised in the statements of financial position and net open position by currency of the Company.

The CompanyMYR

RM’000IDR

RM’000USD

RM’000

Total non-MYR

RM’000Grand total

RM’000

2011 Items recognised in the statements of financial position Financial assets Cash and short-term funds 316,050 6 772 778 316,828 Derivative financial instruments – Trading derivatives 13,188 – – – 13,188 – Hedging derivatives 4,271 – – – 4,271 Loans, advances and financing – Term loans/financing 930 – – – 930 Other assets 21,959 – – – 21,959 Amount due from subsidiaries 4,811 – – – 4,811

361,209 6 772 778 361,987

Financial liabilities Derivatives financial instruments – Trading derivatives – – 4,164 4,164 4,164 Other liabilities 3,240 – – – 3,240 Other borrowings 2,948,000 – 318,052 318,052 3,266,052 Subordinated notes 2,141,655 – – – 2,141,655

5,092,895 – 322,216 322,216 5,415,111

2010 Items recognised in the statements of financial position Financial assets Cash and short-term funds 527,899 1,179 748 1,927 529,826 Derivative financial instruments – Hedging derivatives 5,676 – – – 5,676 Loans, advances and financing – Term loans/financing 1,147 – – – 1,147 Other assets 8,509 – – – 8,509 Amount due from subsidiaries 19,223 44 – 44 19,267

562,454 1,223 748 1,971 564,425

Financial liabilities Derivatives financial instruments – Trading derivatives 9,363 – – – 9,363 Other liabilities 1,463 – – – 1,463 Other borrowings 1,355,715 – 308,633 308,633 1,664,348 Subordinated notes 2,130,000 – – – 2,130,000 Amount due to subsidiaries 147 – – – 147

3,496,688 – 308,633 308,633 3,805,321

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.2 Market risk (Continued)53.2.3 Foreign exchange risk (Continued)

(b) Sensitivity of profit and reserves The table below shows the sensitivity of the Group and the Company’s profit and reserves to movement in foreign exchange rates:

The Group The Company

1% appreciation

RM’000

1% depreciation

RM’000

1% appreciation

RM’000

1% depreciation

RM’000

2011 Impact to profit (after tax) 3,755 (3,755) (2,412) 2,412 Impact to reserves (17,283) 17,283 – –

2010 Impact to profit (after tax) 561 (561) (2,484) 2,484 Impact to reserves (20,475) 20,475 – –

The impact on profit arises from transactional exposures while the impact on reserves arises from net investment hedge from parallel shifts in foreign exchange rates.

The projection assumes that foreign exchange rates move by the same amount and, therefore, do not reflect the potential impact on profit and reserves of some rates changing while others remain unchanged. The projections also assume that all other variables are held constant and are based on a constant reporting date position and that all positions run to maturity.

53.3 Liquidity risk Liquidity risk is defined as the current and prospective risk to earnings, shareholders fund or the reputation arising from the Group’s inability to

efficiently meet its present and future (both anticipated and unanticipated) funding needs or regulatory obligations when they come due, which may adversely affect its daily operations and incur unacceptable losses. Liquidity risk arises from mismatches in the timing of cash flows.

The objective of the Group’s liquidity risk management is to ensure that the Group can meet its cash obligations in a timely and cost-effective manner. To this end, the Group’s liquidity risk management policy is to maintain high quality and well diversified portfolios of liquid assets and sources of funds under both normal business and stress conditions. Due to its large delivery network and marketing focus, the Group is able to maintain a diversified core deposit base comprising savings, demand, and fixed deposits. This provides the Group a stable large funding base.

Risk management at CIMB is managed on Group basis. The day-to-day responsibility for liquidity risk management and control is delegated to the Regional Liquidity Risk Committee (RLRC). The RLRC meets at least once a month to discuss the liquidity risk and funding profile of the Group and each individual entity under the Group. The Asset-Liability Management function, which is responsible for the independent monitoring of the Group liquidity risk profile, works closely with Group Treasury and Investments in its surveillance on market conditions. Business units are responsible for establishing and maintaining strong business relations with their respective depositors and key providers of funds. For overseas branches and subsidiaries, they should seek to be self-sufficient in funding at all times. Group Treasury only acts as a global provider of funds on a need-to or contingency basis. Each entity has to prudently manage its liquidity position to meet its daily operating needs. To take account of the differences in market and regulatory environments, each entity measures and forecasts its respective cash flows arising from the maturity profiles of assets, liabilities, off balance sheet commitments and derivatives over a variety of time horizons under normal business and stress conditions on a regular basis.

Liquidity risk undertaken by the Group is governed by a set of established risk tolerance levels. Management action triggers have been established to alert management to potential and emerging liquidity pressures.The Group Liquidity Risk Management Policy is subjected to annual review while the assumptions and the thresholds levels are regularly reviewed in response to regulatory changes and changing business needs and market conditions. Liquidity positions are monitored on a daily basis and complied with internal risk thresholds and regulatory requirements for liquidity risk. The Group’s contingency funding plan is in place to alert and to enable the management to act effectively and efficiently during a liquidity crisis and under adverse market conditions. The plan consists of two key components: an early warning system and a funding crisis management team. The early warning system is designed to alert the Group’s management whenever the Group’s liquidity position may be at risk.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued) It provides the Group with the analytical framework to detect a likely liquidity problem and to evaluate the Group’s funding needs and strategies

in advance of a liquidity crisis. The early warning system is made up of a set of indicators (monitored against pre-determined thresholds) that can reliably signal the financial strength and stability of the Group. Consolidated stress test, including liquidity stress test, is performed on a semi-annual basis to identify vulnerable areas in its portfolio, gauge the financial impact and enable management to take pre-emptive actions. Two scenarios, namely bank specific crisis and systemic crisis, are modelled. The assumptions used, including run-off rates on deposits, draw down rates on undrawn commitments, and hair cuts for marketable securities, are documented and the test results are submitted to the RLRC, the Group Risk Committee, the Board of Directors of the Bank. The test results to date have indicated that the Group does possess sufficient liquidity capacity to meet the liquidity requirements under various stress test conditions.

53.3.1 Contractual maturity of financial assets and liabilities The table below analyses assets and liabilities of the Group based on the remaining period at the end of the reporting period to the

contractual maturity date in accordance with the requirement of BNM GP8:

The Group2011

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-specific maturityRM’000

TotalRM’000

AssetsCash and short-term funds 34,668,845 – – – – – – 34,668,845Reverse repurchase agreements 2,117,685 1,532,314 – 580,483 – – – 4,230,482Deposits and placements with banks and other financial institutions 1,061,090 1,806,237 348,652 64,224 258,409 635,400 – 4,174,012Financial investments at fair value through profit or loss 2,041,400 4,040,512 1,616,874 1,193,501 2,556,819 928,444 1,288,150 13,665,700Financial investments available-for-sale 279,083 55,254 288,233 871,985 5,107,587 5,907,349 1,263,728 13,773,219Financial investments held-to-maturity 1,053,761 1,196,728 340,506 980,200 9,060,871 4,286,718 – 16,918,784Derivative financial instruments 381,429 213,463 111,739 199,542 2,141,779 1,226,121 – 4,274,073Loans, advances and financing 30,820,633 11,292,480 6,494,291 10,301,773 42,969,937 81,959,663 – 183,838,777Other assets 4,639,407 38,465 224,620 65,466 67,380 1,481,737 1,280 6,518,355Taxation recoverable 139,258 – – – – – – 139,258Deferred tax assets – – – – – – 49,998 49,998Statutory deposits with central banks – – – – – – 5,084,105 5,084,105Investment in associates – – – – – – 1,169,387 1,169,387Investment in joint controlled entities – – – – – – 188,479 188,479Property, plant and equipment – – – – – – 1,458,400 1,458,400Investment properties – – – – – – 8,653 8,653Prepaid lease payment – – – – – – 170,564 170,564Goodwill – – – – – – 8,242,489 8,242,489Intangible assets – – – – – – 1,611,879 1,611,879Non-current assets/disposal groups held for sale 5,043 – – – – – 12,205 17,248

Total assets 77,207,634 20,175,453 9,424,915 14,257,174 62,162,782 96,425,432 20,549,317 300,202,707

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.1 Contractual maturity of financial assets and liabilities (Continued) The table below analyses assets and liabilities of the Group based on the remaining period at the end of the reporting period to the

contractual maturity date in accordance with the requirement of BNM GP8 (Continued):

The Group2011

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-specific maturityRM’000

TotalRM’000

LiabilitiesDeposits from customers 165,841,200 26,015,619 12,278,385 12,040,903 4,312,621 1,444,414 – 221,933,142Deposits and placements of banks and other financial institutions 6,217,328 2,549,561 684,424 227,753 2,137,155 1,148,088 – 12,964,309Repurchase agreement 544 – – 580,483 – 486,919 – 1,067,946Derivatives financial instruments 686,204 190,544 85,389 240,587 1,766,667 1,247,900 – 4,217,291Bills and acceptances payable 3,229,466 2,998,338 1,325,341 2,136 11,410 – – 7,566,691Other liabilities 5,862,743 694,414 25,644 29,930 46,448 168,631 – 6,827,810Deferred tax liabilities – – – – – – 134,285 134,285Current tax liabilities 483,820 – – – – – – 483,820Bonds – – – – – 521,225 – 521,225Other borrowings 586,713 80,720 1,106,378 378,812 3,129,383 42,026 – 5,324,032Subordinated notes 125,794 1,886 11,654 – 5,205,506 6,073,140 – 11,417,980Non cumulative guaranteed and redeemable preference shares – – – – 781,016 100,000 – 881,016

Total liabilities 183,033,812 32,531,082 15,517,215 13,500,604 17,390,206 11,232,343 134,285 273,339,547

Net liquidity gap (105,826,178) (12,355,629) (6,092,300) 756,570 44,772,576 85,193,089 20,415,032 26,863,160

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.1 Contractual maturity of financial assets and liabilities (Continued) The table below analyses assets and liabilities of the Group based on the remaining period at the end of the reporting period to the

contractual maturity date in accordance with the requirement of BNM GP8 (Continued):

The Group2010

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-specific maturityRM’000

TotalRM’000

AssetsCash and short-term funds 27,185,260 – – – – – – 27,185,260Reverse repurchase agreements 2,802,424 1,001,833 405 – – – – 3,804,662Deposits and placements with banks and other financial institutions 5,373,729 2,709,677 2,367,811 906,268 249,580 138,758 – 11,745,823Financial investments at fair value through profit or loss 5,969,164 4,197,918 1,669,228 603,549 2,010,451 1,249,956 1,382,330 17,082,596Financial investments available-for-sale 212,919 426,929 172,765 669,535 4,113,064 4,375,610 1,687,880 11,658,702Financial investments held-to-maturity 83,030 94,944 269,190 1,671,189 7,930,421 4,071,489 – 14,120,263Derivative financial instruments 430,440 203,461 193,322 278,352 1,631,206 840,374 – 3,577,155Loans, advances and financing 29,994,524 9,466,053 6,264,936 7,867,608 40,521,182 65,067,082 – 159,181,385Other assets 4,987,616 3,540 91,078 76,600 412,182 1,782,506 – 7,353,522Taxation recoverable 98,358 – – – – – – 98,358Deferred tax assets – – – – – – 15,269 15,269Statutory deposits with central banks – – – – – – 1,410,436 1,410,436Investment in associates – – – – – – 508,807 508,807Investment in joint controlled entities – – – – – – 171,486 171,486Property, plant and equipment – – – – – – 1,442,948 1,442,948Investment properties – – – – – – 61,216 61,216Prepaid lease payment – – – – – – 185,542 185,542Goodwill – – – – – – 8,159,469 8,159,469Intangible assets – – – – – – 1,543,295 1,543,295Non-current assets/disposal groups held for sale 100 46,904 – – – – 12,046 59,050

Total assets 77,137,564 18,151,259 11,028,735 12,073,101 56,868,086 77,525,775 16,580,724 269,365,244

LiabilitiesDeposits from customers 132,683,276 40,421,818 9,619,799 11,130,102 4,826,141 1,164,528 – 199,845,664Deposits and placements of banks and other financial institutions 5,212,419 2,673,116 2,106,638 1,453,783 1,461,191 185,010 – 13,092,157Repurchase agreements – 33,087 – – – – – 33,087Derivatives financial instruments 832,066 208,956 313,614 278,100 1,490,325 625,455 – 3,748,516Bills and acceptances payable 2,262,805 1,559,807 524,598 184,088 1,148 – – 4,532,446Other liabilities 6,296,290 411,694 4,349 83,732 210,194 1,618,409 – 8,624,668Deferred tax liabilities – – – – – – 12,124 12,124Current tax liabilities 322,789 – – – – – – 322,789Amount due to Cagamas Berhad – 45,416 62,107 – – – – 107,523Bonds – – 423,982 – – – – 423,982Other borrowings 85,693 131,049 1,261,037 322,357 1,836,786 146,665 – 3,783,587Subordinated notes 55,932 – – – 3,255,754 6,363,654 – 9,675,340Non cumulative guaranteed and redeemable preference shares – – – – 760,162 100,000 – 860,162

Total liabilities 147,751,270 45,484,943 14,316,124 13,452,162 13,841,701 10,203,721 12,124 245,062,045

Net liquidity gap (70,613,706) (27,333,684) (3,287,389) (1,379,061) 43,026,385 67,322,054 16,568,600 24,303,199

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.1 Contractual maturity of financial assets and liabilities (Continued) The table below analyses assets and liabilities of the Company based on the remaining period at the end of the reporting period to the

contractual maturity date in accordance with the requirement of BNM GP8 (Continued):

The Company2011

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-specific maturityRM’000

TotalRM’000

AssetsCash and short-term funds 316,828 – – – – – – 316,828Derivative financial instruments – – – – 17,459 – – 17,459Loans, advances and financing – 2 7 – 42 879 – 930Other assets 21,904 – – – – – 1,280 23,184Taxation recoverable 93,288 – – – – – – 93,288Investment in subsidiaries – – – – – – 17,887,961 17,887,961Amount owing from subsidiaries 23 – – 2,000 2,788 – – 4,811Investment in associates – – – – – – 3,834 3,834Property, plant and equipment – – – – – – 31,607 31,607Investment properties – – – – – – 527 527

Total assets 432,043 2 7 2,000 20,289 879 17,925,209 18,380,429

LiabilitiesDerivatives financial instruments – – – – 4,164 – – 4,164Other liabilities 3,242 – – – – – – 3,242Deferred tax liabilities – – – – – – 2,122 2,122Other borrowings 100,953 352 1,006,099 – 2,158,648 – – 3,266,052Subordinated notes – – 11,655 – – 2,130,000 – 2,141,655

Total liabilities 104,195 352 1,017,754 – 2,162,812 2,130,000 2,122 5,417,235

Net liquidity gap 327,848 (350) (1,017,747) 2,000 (2,142,523) (2,129,121) 17,923,087 12,963,194

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.1 Contractual maturity of financial assets and liabilities (Continued) The table below analyses assets and liabilities of the Company based on the remaining period at the end of the reporting period to the

contractual maturity date in accordance with the requirement of BNM GP8 (Continued):

The Company2010

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-specific maturityRM’000

TotalRM’000

AssetsCash and short-term funds 529,826 – – – – – – 529,826Derivative financial instruments – – – – 5,676 – – 5,676Loans, advances and financing – – – 20 88 1,039 – 1,147Other assets 1,487 – – – 8,410 – – 9,897Taxation recoverable 55,383 – – – – – – 55,383Investment in subsidiaries – – – – – – 16,093,491 16,093,491Amount owing from subsidiaries 19,267 – – – – – – 19,267Investment in associates – – – – – – 3,834 3,834Property, plant and equipment – – – – – – 32,471 32,471Investment properties – – – – – – 3,516 3,516

Total assets 605,963 – – 20 14,174 1,039 16,133,312 16,754,508

LiabilitiesDerivatives financial instruments – – – – 9,363 – – 9,363Other liabilities 1,515 – – – – – – 1,515Amount owing to subsidiaries 147 – – – – – – 147Deferred tax liabilities – – – – – – 3,988 3,988Other borrowings 13,880 – – – 1,650,468 – – 1,664,348Subordinated notes – – – – 750,000 1,380,000 – 2,130,000

Total liabilities 15,542 – – – 2,409,831 1,380,000 3,988 3,809,361

Net liquidity gap 590,421 – – 20 (2,395,657) (1,378,961) 16,129,324 12,945,147

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.2 Contractual maturity of financial liabilities on an undiscounted basis Non-derivative financial liabilities The tables below present the cash flows payable by the Group under non-derivative financial liabilities by remaining contractual maturities

at the end of the reporting period. The amounts disclosed in the table are the contractual undiscounted cash flow.

The Group

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000Total

RM’000

2011Non-derivative financial liabilitiesDeposits from customers 165,851,836 26,165,653 12,432,907 12,324,846 3,612,980 2,698,893 223,087,115Deposits and placements of banks and other financial institutions 6,225,864 2,561,575 695,087 234,819 2,181,706 1,240,872 13,139,923Repurchase agreements 544 – – 594,150 – 486,919 1,081,613Bills and acceptances payable 3,231,179 3,005,946 1,332,618 2,237 11,410 – 7,583,390Other liabilities 4,993,231 50,768 29,519 33,915 72,460 35,868 5,215,761Other borrowings 573,447 96,465 1,269,932 394,099 3,433,053 116,254 5,883,250Bonds 2,026 7,135 10,702 21,405 224,921 462,897 729,086Subordinated obligations 135,983 97,753 222,282 339,037 6,690,698 8,385,794 15,871,547Non-cumulative guaranteed and redeemable preference shares 6,894 – 20,800 20,800 940,519 100,000 1,089,013

181,021,004 31,985,295 16,013,847 13,965,308 17,167,747 13,527,497 273,680,698

Items not recognised in the statements of financial positionFinancial guarantees 2,798,299 420,284 341,442 351,377 243,609 344 4,155,355Credit related commitments and contingencies 38,068,387 1,930,856 614,353 1,224,919 1,387,316 6,239,831 49,465,662

40,866,686 2,351,140 955,795 1,576,296 1,630,925 6,240,175 53,621,017

2010Non-derivative financial liabilitiesDeposits from customers 133,316,008 40,648,129 9,761,046 11,287,446 7,611,869 1,223,698 203,848,196Deposits and placements of banks and other financial institutions 5,287,552 2,706,066 2,130,720 1,481,066 2,493,072 201,850 14,300,326Repurchase agreements – 33,325 – – – – 33,325Bills and acceptances payable 2,266,995 1,566,924 529,233 184,088 1,148 – 4,548,388Amount due to Cagamas Berhad 452 46,137 62,647 – – – 109,236Other liabilities 5,555,586 398,843 112,695 107,912 536,157 673,582 7,384,775Other borrowings 171,015 169,157 1,406,402 586,177 2,019,115 150,074 4,501,940Bonds – – 437,112 – – – 437,112Subordinated obligations 68,954 71,569 227,385 326,154 5,654,799 8,152,882 14,501,743Non-cumulative guaranteed and redeemable preference shares – – 20,187 20,187 922,453 100,000 1,062,827

146,666,562 45,640,150 14,687,427 13,993,030 19,238,613 10,502,086 250,727,868

Items not recognised in the statements of financial positionFinancial guarantees 2,610,877 133,860 203,676 289,117 1,068,967 93,155 4,399,652Credit related commitments and contingencies 36,456,575 1,806,829 625,257 950,628 2,263,115 4,947,420 47,049,824

39,067,452 1,940,689 828,933 1,239,745 3,332,082 5,040,575 51,449,476

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued) Non-derivative financial liabilities (Continued) The tables below present the cash flows payable by the Company under non-derivative financial liabilities by remaining contractual maturities

at the end of the reporting period. The amounts disclosed in the table are the contractual undiscounted cash flow.

The Company

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000Total

RM’000

2011Non-derivative financial liabilitiesOther liabilities 3,242 – – – – – 3,242Other borrowings 106,318 13,110 1,038,340 38,392 2,315,437 – 3,511,597Subordinated obligations – – 73,320 73,596 725,224 2,365,010 3,237,150

109,560 13,110 1,111,660 111,988 3,040,661 2,365,010 6,751,989

2010Non-derivative financial liabilitiesOther liabilities 1,515 – – – – – 1,515Amount owing to subsidiaries 147 – – – – – 147Other borrowings – 617 29,400 30,125 1,701,750 – 1,761,892Subordinated obligations – – 73,320 73,596 1,337,160 1,903,850 3,387,926

1,662 617 102,720 103,721 3,038,910 1,903,850 5,151,480

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued) Derivative financial liabilities The table below analyses the Group’s trading derivative financial liabilities and hedging derivative financial liabilities that will be settled on

a net basis.

All trading derivatives, whether net or gross settled are analysed based on the expected maturity as the contractual maturity is not considered to be essential to the understanding of the timing of the cash flows. The amounts disclosed in respect of such contracts are the fair values. The comparatives were not restated as allowed by the transitional provision arising from the adoption of Amendment to FRS 7 “Financial Instruments Disclosures – Improving Disclosures about Financial Instruments”. As such, the prior year disclosure analyses the trading derivatives based on the remaining contractual maturities and whether it was net or gross settled.

Hedging derivatives are disclosed based on remaining contractual maturities as the contractual maturities of such contracts are essential for an understanding of the timing of the cash flows. The amounts disclosed in respect of such contracts are the contractual undiscounted cash flows.

The Group

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000

Non-specific maturityRM’000

TotalRM’000

2011Derivative financial liabilitiesTrading derivatives– Foreign exchange derivatives 910,452 – – – – – – 910,452– Interest rate derivatives 2,345,719 – – – – – – 2,345,719– Equity related derivatives 393,080 – – – – – – 393,080– Commodity related derivatives 54,409 – – – – – – 54,409– Credit related contracts 40,744 – – – – – – 40,744

Hedging derivatives– Interest rate derivatives 3,434 (26,746) 78,228 56,341 433,495 281,505 – 826,257

3,747,838 (26,746) 78,228 56,341 433,495 281,505 – 4,570,661

2010Derivative financial liabilitiesTrading derivatives– Foreign exchange derivatives 41,209 3,917 23,779 25,229 67,289 23,875 38,479 223,777– Interest rate derivatives 231,481 97,391 133,464 (148,671) 420,729 179,852 15,028 929,274– Equity related derivatives 11,441 78,305 79,979 255,402 17,310 154,402 49,114 645,953– Commodity related derivatives – 1,186 1,700 9,084 6,565 – – 18,535– Credit related contracts – 466 416 572 4,113 36,354 (74) 41,847

Hedging derivatives– Interest rate derivatives 23,986 (9,188) 27,300 41,217 359,266 283,613 – 726,194

308,117 172,077 266,638 182,833 875,272 678,096 102,547 2,585,580

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.3 Liquidity risk (Continued)53.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued) Derivative financial liabilities (Continued) The Group’s and the Company’s derivatives that will be settled on a gross basis include foreign exchange derivatives, such as currency

forward, currency swap, currency options and cross currency interest rate swaps.

The table below analyses the Group’s and the Company’s derivative financial liabilities that will be settled on a gross basis into relevant maturity groupings by expected maturities at the end of the reporting period. The amounts disclosed in the table are the contractual undiscounted cash flow.

The Group

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000Total

RM’000

2011Derivative financial liabilitiesHedging derivativesCross currency interest rate derivatives– Outflow (1,674) – – (1,638) (81,366) – (84,678)– Inflow 384 – 391 787 77,064 – 78,626

(1,290) – 391 (851) (4,302) – (6,052)

2010Derivative financial liabilitiesTrading derivativesForeign exchange derivatives:– Outflow (12,656,491) (8,244,384) (6,783,493) (3,748,341) (5,606,627) (1,602,872) (38,642,208)– Inflow 12,465,855 8,010,064 6,418,671 3,494,259 5,009,575 1,486,522 36,884,946

Hedging derivativesCross currency interest rate derivatives– Outflow – (1,488) – (1,782) (8,882) – (12,152)– Inflow – 511 – 507 2,526 – 3,544

(190,636) (235,297) (364,822) (255,357) (603,408) (116,350) (1,765,870)

The Company

Up to1 monthRM’000

> 1 – 3monthsRM’000

> 3 – 6monthsRM’000

> 6 – 12monthsRM’000

> 1 – 5years

RM’000

Over 5years

RM’000Total

RM’000

2011Derivative financial liabilitiesTrading derivatives– Foreign exchange derivatives 4,164 – – – – – 4,164

4,164 – – – – – 4,164

2010Derivative financial liabilitiesTrading derivativesForeign exchange derivatives:– Outflow – (2,788) (2,850) (5,670) (22,648) – (33,956)– Inflow – 848 869 1,729 6,905 – 10,351

– (1,940) (1,981) (3,941) (15,743) – (23,605)

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.4 Fair value of financial instruments Financial instruments comprise financial assets, financial liabilities and items not recognised in the statements of financial position. Fair value is the

amount at which a financial asset could be exchanged or a financial liability settled, between knowledgeable and willing parties in an arm’s length transaction.

53.4.1 Determination of fair value and fair value hierarchy With effect from 1 January 2011, the Group adopted the amendments to FRS 7 which requires disclosures of fair value measurements

by level of the following fair value measurement hierarchy:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Other techniques for which all inputs which have a significant effect on the recorded fair value are observable for the asset or liability, either directly or indirectly

Level 3 – Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (unobservable inputs)

Comparative figures for the Group are not presented for 31 December 2011 as allowed by the transitional provision arising from the adoption of Amendment to FRS 7 “Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments”.

The following table represents assets and liabilities measured at fair value and classified by level with the following fair value measurement hierarchy:

The Group The Company

Fair Value Fair Value

2011

Carrying amountRM’000

quoted market prices

(Level 1)RM’000

Observable inputs

(Level 2)RM’000

Significant unobservable

inputs(Level 3)RM’000

TotalRM’000

Carrying amountRM’000

quoted market prices

(Level 1)RM’000

Observable inputs

(Level 2)RM’000

Significant unobservable

inputs(Level 3)RM’000

TotalRM’000

Financial assetsFinancial assets held for trading– Money market instruments 8,311,274 – 8,311,274 – 8,311,274 – – – – –– Quoted securities 2,031,609 1,211,007 820,602 – 2,031,609 – – – – –– Unquoted securities 3,322,817 – 3,115,435 207,382 3,322,817 – – – – –Financial investments available-for-sale– Money market instruments 938,527 – 938,527 – 938,527 – – – – –– Quoted securities 3,620,077 420,043 3,200,028 6 3,620,077 – – – – –– Unquoted securities 9,161,401 – 8,158,178 1,003,223 9,161,401 – – – – –Derivative financial instruments– Trading derivatives 4,016,891 32,645 3,984,246 – 4,016,891 13,188 – 13,188 – 13,188– Hedging derivatives 257,182 – 257,182 – 257,182 4,271 – 4,271 – 4,271

Total 31,659,778 1,663,695 28,785,472 1,210,611 31,659,778 17,459 – 17,459 – 17,459

Financial liabilitiesDerivative financial instruments– Trading derivatives 3,744,404 3,273 3,741,131 – 3,744,404 4,164 – 4,164 – 4,164– Hedging derivatives 472,887 – 472,887 – 472,887 – – – – –

Total 4,217,291 3,273 4,214,018 – 4,217,291 4,164 – 4,164 – 4,164

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.4 Fair value of financial instruments (Continued)53.4.1 Determination of fair value and fair value hierarchy (Continued) Financial instruments are classified as Level 1 if their value is observable in an active market. Such instruments are valued by reference to

unadjusted quoted prices for identical assets or liabilities in active markets where the quoted prices is readily available, and the price represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an on-going basis. These would include actively traded listed equities and actively exchange-traded derivatives.

Where fair value is determined using unquoted market prices in less active markets or quoted prices for similar assets and liabilities, such instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the Group then determines fair value based upon valuation techniques that use as inputs, market parameters including but not limited to yield curves, volatilities and foreign exchange rates. The majority of valuation techniques employ only observable market data and so reliability of the fair value measurement is high. These would include certain bonds, government bonds, corporate debt securities, repurchase and reverse purchase agreements, loans, credit derivatives, certain issued notes and the Group’s OTC derivatives.

Financial instruments are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data (unobservable inputs). Such inputs are generally determined based on observable inputs of a similar nature, historical observations on the level of the input or other analytical techniques.

This category includes private equity investments, certain OTC derivatives (requiring complex and unobservable inputs such as correlations and long dated volatilities) and certain bonds.

The following represents the changes in Level 3 instruments for the financial year ended 31 December 2011 for the Group.

Financial Assets

The Group2011

Financial assets held for trading

Unquoted securities

RM’000

Financial investments

available-for-sale

quoted andUnquoted securities

RM’000Total

RM’000

At 1 January 140,081 1,014,387 1,154,468 Total gains recognised in statement of income 9,144 26,217 35,361 Total losses recognised in other comprehensive income (553) (19,506) (20,059) Purchases 58,710 98,943 157,653 Sales – (48,451) (48,451) Settlements – (61,866) (61,866) Exchange fluctuation – (6,495) (6,495)

At 31 December 207,382 1,003,229 1,210,611

Total gains recognised in statement of income relating to assets held on 31 December 5,196 39,995 45,191

Total gains recognised in other comprehensive income relating to assets held on 31 December (553) (19,568) (20,121)

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.4 Fair value of financial instruments (Continued)53.4.2 Financial instruments not measured at fair value The total fair value of each financial assets and liabilities presented on the statements of financial position as at year ended 31 December

of the Group and the Company approximates the total carrying value as at the reporting date, except for the following:

2011 2010

The Group

Carrying amountRM’000

Fair valueRM’000

Carrying amountRM’000

Fair valueRM’000

Financial assets Other assets 6,518,355 6,498,550 7,353,522 7,271,394 Deposits and placement with banks and other financial institutions 4,174,012 4,398,242 11,745,823 11,845,472 Financial investments held-to-maturity 16,918,784 17,273,261 14,120,263 14,267,806 Loans, advances and financing 183,838,777 184,015,982 159,181,385 155,391,958

Financial liabilities Deposits from customers 221,933,142 221,794,683 199,845,664 199,539,559 Deposits and placement of banks and other financial institutions 12,964,309 13,042,209 13,092,157 13,118,440 Bonds – – 423,982 424,962 Other borrowings 5,324,032 5,300,826 – – Subordinated notes 11,417,980 11,496,338 9,675,340 9,940,775

2011 2010

The Company

Carrying amountRM’000

Fair valueRM’000

Carrying amountRM’000

Fair valueRM’000

Financial assets Loans, advances and financing 930 882 1,147 1,107

Financial liabilities Subordinated notes 2,141,655 2,255,598 2,130,000 2,359,441 Other borrowings 3,266,052 3,285,816 – –

The fair values are based on the following methodologies and assumptions:

Short-term funds and placements with financial institutions For short-term funds and placements with financial institutions with maturities of less than six months, the carrying value is a reasonable

estimate of fair value. For deposits and placements with maturities of six months and above, the estimated fair value is based on discounted cash flows using prevailing money market interest rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.4 Fair value of financial instruments (Continued)53.4.2 Financial instruments not measured at fair value (Continued) The fair values are based on the following methodologies and assumptions:

Short-term funds and placements with financial institutions For short-term funds and placements with financial institutions with maturities of less than six months, the carrying value is a reasonable

estimate of fair value. For deposits and placements with maturities of six months and above, the estimated fair value is based on discounted cash flows using prevailing money market interest rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity.

Financial investments held-to-maturity The estimated fair value is generally based on quoted and observable market prices. Where there is no ready market in certain securities,

the Group and the Company establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

Loans, advances and financing For floating rate loans, the carrying value is generally a reasonable estimate of fair value.

For fixed rate loans with maturities of six months or more, the fair value is estimated by discounting the estimated future cash flows using the prevailing market rates of loans with similar credit risks and maturities.

The fair values of impaired floating and fixed rate loans are represented by their carrying value, net of individual impairment allowance/specific allowance, being the expected recoverable amount.

Amount due (to)/from subsidiaries and related companies The estimated fair values of the amount due (to)/from subsidiaries and related companies approximate the carrying values as the balances

are either recallable on demand or are based on the current rates for such similar loans.

Deposits from customers For deposits from customers with maturities of less than six months, the carrying amounts are a reasonable estimate of their fair value.

For deposit with maturities of six months or more, fair values are estimated using discounted cash flows based on prevailing market rates for similar deposits from customers.

Deposits and placements of banks and other financial institutions The estimated fair values of deposits and placements of banks and other financial institutions with maturities of less than six months

approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market interest rates for deposits and placements with similar remaining period to maturities.

Obligations on securities sold under repurchase agreements The estimated fair values of obligations on securities sold under repurchase agreements with maturities of less than six months approximate

the carrying values. For obligations on securities sold under repurchase agreements with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market interest rates with similar remaining period to maturity.

Floating rate certificates of deposits For floating rate certificates of deposits, values are estimated based on discounted cash flow using prevailing market interest rates for

floating rate certificates of deposits.

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53 FINANCIAL RISk MANAGEMENT (CONTINUED)

53.4 Fair value of financial instruments (Continued)53.4.2 Financial instruments not measured at fair value (Continued) The fair values are based on the following methodologies and assumptions:

Bills and acceptances payable The estimated fair values of bills and acceptances payable with maturities of less than six months approximate the carrying values. For

bills and acceptance payable with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market interest rates for bills and acceptance payable with similar remaining period to maturity.

Other liabilities The fair value of other liabilities approximates the carrying value at the statement of financial position date.

Other borrowings The estimated fair values of other borrowings with maturities of less than six months approximate the carrying values. For other borrowings

with maturities six months or more, the fair values are estimated based on discounted cash flows using prevailing market rates for borrowings with similar risk profile.

Subordinated notes The fair values for the quoted subordinated notes are obtained from quoted market prices while the fair values for unquoted subordinated

notes are estimated based on discounted cash flow models.

Redeemable preference shares The estimated fair value of redeemable preference shares (“RPS”) approximates the carrying value based on Directors’ estimate as the

effective interest rate of the RPS is a reflection of the current rate for such similar instrument.

Derivative financial instruments The fair values of derivative financial instruments are obtained from quoted market prices in active markets, including recent market

transactions and valuation techniques, including discounted cash flow models and option pricing models, as appropriate.

Credit related commitment and contingencies The net fair value of these items was not calculated as estimated fair values are not readily ascertainable. These financial instruments

generally relate to credit risks and attract fees in line with market prices for similar arrangements. They are not presently sold nor traded. The fair value may be represented by the present value of fees expected to be received, less associated costs.

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54 THE OPERATIONS OF ISLAMIC BANkING

Statement of Financial Position as at 31 December 2011

Note2011

RM’0002010

RM’000

Assets Cash and short-term funds (a) 8,391,678 7,934,045 Deposits and placements with banks and other financial institutions (b) 1,557,983 1,340,924 Financial assets held for trading (c) 2,911,603 2,549,533 Islamic derivative financial instruments (d) 249,169 284,789 Financial investments available-for-sale (e) 942,125 459,123 Financial investments held-to-maturity (f) 1,884,889 1,425,372 Financing, advances and other financing/loans (g) 29,500,400 23,368,509 Deferred tax assets (h) 8,035 5,589 Amount due from related companies 55,439 48,835 Amount due from holding company 568,921 514,680 Statutory deposits with Bank Negara Malaysia (i) 1,097,797 143,406 Property, plant and equipment (j) 9,567 7,314 Other assets (k) 545,199 764,109 Goodwill (l) 136,000 136,000 Intangible assets (m) 4,170 4,287

Total assets 47,862,975 38,986,515

Liabilities Deposits from customers (n) 31,565,815 24,923,994 Deposits and placements of banks and other financial institutions (o) 10,726,368 10,244,515 Islamic derivative financial instruments (d) 452,582 265,725 Amount due to holding company 402,487 184,519 Amount due to related companies 1,112 247 Provision for taxation and Zakat (p) 112,330 86,284 Other liabilities (q) 1,005,532 853,473 Subordinated Sukuk (r) 564,679 300,000

Total liabilities 44,830,905 36,858,757

Equity Islamic banking funds 55,000 91,693 Ordinary share capital (s) 1,000,000 750,000 Perpetual preference shares (s) 70,000 70,000 Reserves (t) 1,897,025 1,176,620

3,022,025 2,088,313 Non-controlling interests 10,045 39,445

Total equity 3,032,070 2,127,758

Total equity and liabilities 47,862,975 38,986,515

Commitments and contingencies (d)(ii) 18,848,467 20,596,415

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

Statement of Income for the financial year ended 31 December 2011

Note2011

RM’0002010

RM’000

Income derived from investment of depositors’ funds and others (u) 1,817,027 1,594,000 Net income derived from investment of shareholders’ funds (v) 390,223 343,851 Allowances for impairment losses on financing, advances and other loans (w) (151,366) (54,116) Allowance for impairment losses on other receivables (2,753) (134)

Total distributable income 2,053,131 1,883,601 Income attributable to depositors (x) (736,929) (607,815)

Total net income 1,316,202 1,275,786 Personnel expenses (y) (219,145) (135,925) Other overheads and expenditures (z) (150,045) (147,138)

Profit before allowances 947,012 992,723 Writeback of impairment losses 7 –

Profit before taxation and zakat 947,019 992,723 Taxation (aa) (233,420) (218,749)

Profit after taxation and zakat 713,599 773,974

Profit attributable to: Owners of the Parent 713,931 771,559 Non-controlling interests (332) 2,415

713,599 773,974

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

Statement of Comprehensive Income for the financial year ended 31 December 2011

2011RM’000

2010RM’000

Net profit after taxation 713,599 773,974

Other comprehensive income: Revaluation reserve-financial investments available-for-sale (473) 3,885

– Net gain from change in fair value 7,827 6,044 – Realised gain transferred to statement of income on disposal and impairment (7,238) (530) – Income tax effects (1,062) (1,629)

Exchange fluctuation reserve 14,906 593

Other comprehensive income, net of tax 14,433 4,478

Total comprehensive income for the financial year 728,032 778,452

Total comprehensive income attributable to: Owners of the Parent 720,620 780,180 Non-controlling interests 7,412 (1,728)

728,032 778,452

Income from Islamic Banking operations: Total net income 1,316,202 1,275,786 Add: Allowances for impairment losses on financing, advances and other loans 151,366 54,116 Add: Allowances for impairment losses on other receivables 2,753 134

1,470,321 1,330,036

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

Statements of changes in equity for the financial year ended 31 December 2011

Share capital

RM’000

Perpetual preference

sharesRM’000

IslamicBanking

fundsRM’000

Statutory reserveRM’000

Revaluation reserve-financial

investments available-

for-saleRM’000

Exchange fluctuation

reserveRM’000

Regulatory reserveRM’000

Share-based

paymentRM’000

Retained earningsRM’000

TotalRM’000

Non-controlling

interestsRM’000

TotalRM’000

2011 At 1 January 2011 – as previously reported 750,000 70,000 91,693 303,343 4,523 2,276 7,405 – 859,073 2,088,313 39,445 2,127,758 – effect of adopting Amendments to FRS 2 – – – – – – – 15,534 (15,534) – – –

As restated 750,000 70,000 91,693 303,343 4,523 2,276 7,405 15,534 843,539 2,088,313 39,445 2,127,758 Net profit for the financial year – – – – – – – – 713,931 713,931 (332) 713,599 Other comprehensive income (net of tax) – – – 417 (371) 6,643 – – – 6,689 7,744 14,433 Financial investments available-for-sale – – – – (371) – – – – (371) (102) (473) Currency translation difference – – – 417 – 6,643 – – – 7,060 7,846 14,906 Total comprehensive income for the financial year – – – 417 (371) 6,643 – – 713,931 720,620 7,412 728,032 Share-based payment expense – – – – – – – 1,100 – 1,100 – 1,100 Transfer to statutory reserve – – – 167,986 – – – – (167,867) 119 (119) – Transfer to regulatory reserve – – – 439 – – 51,708 – (52,147) – – – Reclassified to conventional – – (36,693) (1,095) (204) – – – – (37,992) (36,693) (74,685) Shares released under Equity Ownership Plan – – – – – – – (135) – (135) – (135) Issue of share capital during the year 250,000 – – – – – – – – 250,000 – 250,000

At 31 December 2011 1,000,000 70,000 55,000 471,090 3,948 8,919 59,113 16,499 1,337,456 3,022,025 10,045 3,032,070

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

Statements of changes in equity for the financial year ended 31 December 2010 (Continued)

Share capital

RM’000

Perpetual preference

sharesRM’000

IslamicBanking

fundsRM’000

Statutory reserveRM’000

Revaluation reserve-financial

investments available-

for-saleRM’000

Exchange fluctuation

reserveRM’000

Regulatory reserveRM’000

Share-based

paymentRM’000

Retained earningsRM’000

TotalRM’000

Non-controlling

interestsRM’000

TotalRM’000

2010 At 1 January 2010 – as previously reported 550,000 70,000 91,693 152,218 467 (2,289) – – 245,395 1,107,484 41,173 1,148,657 – effect of adopting Amendments to FRS 2 – – – – – – – 14,885 (14,885) – – –

As restated 550,000 70,000 91,693 152,218 467 (2,289) – 14,885 230,510 1,107,484 41,173 1,148,657 Net profit for the financial year – – – – – – – – 771,559 771,559 2,415 773,974 Other comprehensive income (net of tax) – – – – 4,056 4,565 – – – 8,621 (4,143) 4,478 Financial investments available-for-sale – – – – 4,056 – – – – 4,056 (171) 3,885 Currency translation difference – – – – – 4,565 – – – 4,565 (3,972) 593 Total comprehensive income for the financial year – – – – 4,056 4,565 – – 771,559 780,180 (1,728) 778,452 Share-based payment expense – – – – – – – 649 – 649 – 649 Transfer to statutory reserve – – – 151,125 – – – – (151,125) – – – Transfer to regulatory reserve – – – – – – 7,405 – (7,405) – – – Issue of share capital during the year 200,000 – – – – – – – – 200,000 – 200,000

At 31 December 2010 750,000 70,000 91,693 303,343 4,523 2,276 7,405 15,534 843,539 2,088,313 39,445 2,127,758

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

Statements of Cash Flows for the financial year ended 31 December 2011

2011RM’000

2010RM’000

Operating activities Profit before taxation 947,019 992,723

Add/(less) adjustments: Depreciation of property, plant and equipment 2,932 2,767 Amortisation of intangible assets 1,280 3,030 Net unrealised loss/(gain) on revaluation of financial assets held for trading 1,431 (247) Net unrealised loss on derivatives 35,237 193,477 Accretion of discount less amortisation of premium (25,142) (28,969) Net gain from sale of financial investments available-for-sale (7,237) (530) Net gain from sale of financial assets held for trading (3,262) – Profit income from financial investments held-to-maturity (76,580) (23,978) Profit income from financial investments available-for-sale (26,693) (21,017) Profit expense on Subordinated Sukuk 23,307 – Share-based payment expense 1,100 649 Shares vested under Equity Ownership Plan (135) – Net loss from hedging derivatives 7,959 – Impairment losses on securities (7) – Allowance for impairment losses on other receivables 2,753 – Allowance for impairment losses on financing, advances and other financing/loans 191,304 75,016

1,075,266 1,192,921 (Increase)/decrease in operating assets Deposits and placements with banks and other financial institutions (217,059) 1,068,334 Financial assets held for trading (334,451) 942,423 Islamic derivative financial instruments 187,240 (1,360) Financing, advances and other financing/loans (6,323,195) (6,762,372) Statutory deposits with Bank Negara Malaysia (954,391) 29,400 Other assets 234,508 (169,492) Amount due from related company (6,604) (47,288) Amount due from holding company (154,316) (601,344)

(7,568,268) (5,541,699) Increase/(decrease) in operating liabilities Deposits from customers 6,641,821 4,743,675 Deposits and placements of banks and other financial institutions 481,853 1,124,175 Other liabilities 156,765 300,670 Amount due to ultimate holding company 217,968 170,996 Amount due to related companies 865 (7,864)

7,499,272 6,331,652

Cash flows generated from/(used in) operations 1,006,270 1,982,874 Taxation and Zakat paid (113,834) (55,331)

Net cash flows (used in)/generated from operating activities 892,436 1,927,543

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

Statements of Cash Flows for the financial year ended 31 December 2011 (Continued)

Note2011

RM’0002010

RM’000

Investing activities Net proceeds from sale of financial investments available-for-sale (471,531) 164,879 Purchase of property, plant and equipment (5,856) (4,605) Purchase of intangible assets (689) (2,809) Net proceeds from (purchase)/sale of financial investments held-to-maturity (457,176) (375,347) Profit income from financial investments held-to-maturity 72,931 19,674 Profit income from financial investments available-for-sale 23,615 21,645

Net cash flows (used in)/generated from investing activities (838,706) (176,563)

Financing activities Issuance of Subordinated Sukuk 250,000 – Profit expense paid on Subordinated Sukuk (21,293) – Reclassified to conventional (74,403) – Issuance of share capital 250,000 200,000

Net cash flows generated from financing activities 404,304 200,000

Net increase/(decrease) in cash and cash equivalents 458,034 1,950,980 Cash and cash equivalents at beginning of financial year 7,934,045 5,943,123 Effect of exchange rate changes (401) 39,942

Cash and cash equivalents at end of financial year 8,391,678 7,934,045

Cash and cash equivalents comprise: Cash and short-term funds (a) 8,391,678 7,934,045

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(a) Cash and short-term funds

2011RM’000

2010RM’000

Cash and balances with banks and other financial institutions 220,994 133,640 Money at call and deposit placements maturing within one month 8,170,684 7,800,405

8,391,678 7,934,045

(b) Deposits and placements with banks and other financial institutions

2011RM’000

2010RM’000

Licensed banks 1,328,619 790,924 Licensed investment banks 229,364 – Other financial institutions – 550,000

1,557,983 1,340,924

(c) Financial assets held for trading

2011RM’000

2010RM’000

Money market instruments: Unquoted: Government Investment Issues 95,456 194,227 Malaysian Government Securities 20,163 – Malaysian Government treasury bills 9,734 – Bank Negara Malaysia Negotiable Notes 1,806,188 1,283,822 Islamic accepted bills 146,891 98,364 Islamic negotiable instruments of deposits 504,157 638,001

2,582,589 2,214,414 quoted securities: Outside Malaysia

Sukuk 122,356 96,185

Unquoted securities: In Malaysia

Private debt securities 170,480 133,479

Outside Malaysia

Islamic debt securities 36,178 105,455

206,658 238,934

2,911,603 2,549,533

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(d) Islamic derivative financial instruments, commitments and contingencies(i) Islamic derivative financial instruments The following tables summarise the contractual or underlying principal amounts of trading derivative and financial instruments held for hedging

purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at statements of financial position date, and do not represent amounts at risk. In the financial statements, trading derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in “Islamic derivative financial instruments” Assets and Liabilities respectively.

2011 2010

PrincipalRM’000

AssetRM’000

LiabilityRM’000

PrincipalRM’000

AssetRM’000

LiabilityRM’000

Trading derivatives Foreign exchange derivatives

Currency forwards 463,003 8,586 (1,641) 33,825 42 (460)

– Less than 1 year 463,003 8,586 (1,641) 33,825 42 (460)

Currency swaps 1,788,566 11,293 (13,542) 2,010,317 15,448 (20,753)

– Less than 1 year 1,788,566 11,293 (13,542) 2,010,317 15,448 (20,753)

Currency spots 1,425 2 – 245 1 –

– Less than 1 year 1,425 2 – 245 1 –

Currency options 67,409 714 (714) – – –

– Less than 1 year 67,409 714 (714) – – –

Cross currency profit rate swaps 330,114 15,939 (15,939) 88,549 2,652 (2,652)

– 1 year to 3 years 89,714 2,867 (2,867) 88,549 2,652 (2,652) – More than 3 years 240,400 13,072 (13,072) – – –

Profit rate derivatives

Islamic profit rate swaps 6,151,909 192,831 (146,708) 7,214,997 204,463 (130,672)

– Less than 1 year 1,391,479 6,831 (618) 740,379 6,481 – – 1 year to 3 years 1,908,124 31,513 (23,397) 4,708,718 114,530 (15,490) – More than 3 years 2,852,306 154,487 (122,693) 1,765,900 83,452 (115,182)

Equity derivatives

Equity options 2,437,168 11,609 (11,609) 3,086,897 51,047 (51,047)

– Less than 1 year 208,568 – – 860,857 11,475 (11,475) – 1 year to 3 years 1,050,637 351 (351) 1,377,773 23,250 (23,250) – More than 3 years 1,177,963 11,258 (11,258) 848,267 16,322 (16,322)

Held for hedging derivatives Islamic profit rate swaps 4,629,498 8,195 (262,429) 4,400,000 11,136 (60,141)

– More than 3 years 4,629,498 8,195 (262,429) 4,400,000 11,136 (60,141)

Total derivative assets/(liabilities) 15,869,092 249,169 (452,582) 16,834,830 284,789 (265,725)

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(d) Islamic derivative financial instruments, commitments and contingencies (Continued)(ii) Commitments and contingencies In the normal course of business, the Group makes various commitments and incur certain contingent liabilities with legal recourse to their

customers. No material losses are anticipated as a result of these transactions.

Treasury related derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in “Derivative Financial Instruments” Assets and Liabilities respectively.

The commitments and contingencies constitute the following:

2011Principal

RM’000

2010Principal

RM’000

Credit related Direct credit substitutes 28,627 37,197 Certain transaction-related contingent items 345,460 374,102 Short-term self-liquidating trade-related contingencies 249,517 17,949 Irrevocable commitments to extend credit: – maturity less than one year 1,469,542 1,829,505 – maturity exceeding one year 857,762 1,411,601 Miscellaneous commitments and contingencies: – Shariah-compliant equity option 28,467 91,231

Total credit-related commitments and contingencies 2,979,375 3,761,585

Treasury related Foreign exchange related contracts: 2,650,517 2,132,936

– less than one year 2,320,403 2,044,387 – one year to less than five years 89,714 88,549 – five years and above 240,400 –

Profit rate related contracts: 10,781,407 11,614,997

– less than one year 1,391,478 740,379 – one year to less than five years 3,027,141 4,708,718 – five years and above 6,362,788 6,165,900

Equity related contracts: 2,437,168 3,086,897

– less than one year 208,568 860,857 – one year to less than five years 1,210,171 1,377,773 – five years and above 1,018,429 848,267

Total treasury-related commitments and contingencies 15,869,092 16,834,830

Total commitments and contingencies 18,848,467 20,596,415

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(e) Financial investments available-for-sale

2011RM’000

2010RM’000

Money market instruments: Unquoted: Government Investment Issues 97,538 65,526 Islamic Cagamas bonds 35,857 35,423 Malaysian Government Securities 98,940 –

232,335 100,949 Unquoted securities: In Malaysia

Private debt securities 597,723 354,435 Placements with Islamic Banking and Finance Institute Malaysia 575 575

Outside Malaysia

Private debt securities 103,738 3,161 Private equity funds 7,754 3

709,790 358,174

942,125 459,123

(f) Financial investments held-to-maturity

2011RM’000

2010RM’000

Money market instruments Unquoted Government Investment Issue 354,429 100,056

quoted securities: Outside Malaysia

Islamic bonds 40,989 23,983 Medium term notes 3,527 3,426 Bank Indonesia Certificates 299,933 69,492

344,449 96,901 Unquoted securities: In Malaysia

Private debt securities 831,991 1,001,081

Outside Malaysia

Private debt securities 363,756 235,111

1,195,747 1,236,192 Amortisation of premium less accretion of discount (9,063) (7,502) Less: Allowance for impairment loss (673) (275)

1,884,889 1,425,372

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(g) Financing, advances and other financing/loans

2011RM’000

2010RM’000

(i) By type: Cash line 373,056 322,529 Term financing – House financing 7,346,169 5,625,895 – Syndicated financing 287,618 579,701 – Hire purchase receivables 5,551,836 5,252,944 – Other term financing 15,160,078 11,051,273 Bills receivable 2,581 2,235 Trust receipts 35,391 59,091 Claims on customers under acceptance credits 233,479 191,657 Revolving credits 502,124 407,330 Credit card receivables 111,886 90,472 Share margin financing 167,485 92,962 Other financing/loans 55,172 17,796

Gross financing, advances and other financing/loans 29,826,875 23,693,885 Fair value changes arising from fair value hedge 241,966 17,997

30,068,841 23,711,882 Less: Allowance for impairment losses – Individual impairment allowance (139,775) (97,021) – Portfolio impairment allowance (428,666) (246,352)

(568,441) (343,373)

Net financing, advances and other financing/loans 29,500,400 23,368,509

(a) Included in financing, advances and other financing/loans are exposures to Restricted Profit Sharing Investment Accounts (‘RPSIA’), as part of an arrangement between CIMB Islamic and CIMB Bank. CIMB Bank is exposed to risks and rewards on RPSIA financing and will account for all the allowances for impairment losses for bad and doubtful debts arising thereon.

As at 31 December 2011, the gross exposures to RPSIA financing is RM1,065 million (2010: RM7,331 million) and the portfolio impairment allowance relating to this RPSIA amounting to RM3.7 million (2010: RM154.8 million) is recognised in the Financial Statements of CIMB Bank. There was no individual impairment provided on this RPSIA financing.

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)(b) During the financial year, the Group has undertaken fair value hedges on RM4,350 million (2010: RM4,400 million) financing using Islamic profit

rate swaps.

2011RM’000

2010RM’000

Gross financing hedged 4,350,000 4,400,000 Fair value changes arising from fair value hedges 241,966 17,997

4,591,966 4,417,997

The fair value loss on Islamic profit rate swaps in this hedge transaction as at 31 December 2011 was RM262.0 million (2010: RM49.0 million).

2011RM’000

2010RM’000

(ii) By contract: Bai’ Bithaman Ajil (deferred payment sale) 11,569,606 10,320,341 Murabahah (Cost Plus Sale) 1,470,041 1,147,289 Ijarah Muntahia Bittamlik/AITAB (Lease Ending with Ownership) 6,319,905 5,979,854 Bai’ al-’inah (Sale and repurchase) 9,913,017 5,827,671 Others 554,306 418,730

29,826,875 23,693,885

(iii) By type of customers: Domestic non-bank financial institutions 357,211 213,028 Domestic business enterprises – small medium enterprises 2,084,187 1,750,873 – others 3,146,764 3,131,681 Government and statutory bodies 6,545,671 4,539,837 Individuals 17,120,833 13,483,758 Other domestic entities 90,017 34,246 Foreign entities 482,192 540,462

29,826,875 23,693,885

(iv) By profit sensitivity: Fixed rate – House financing 614,443 511,823 – Hire purchase receivables 5,551,836 5,252,944 – Other fixed rate financing 12,499,271 8,416,119 Variable rate – House financing 6,731,726 5,114,072 – Others 4,429,599 4,398,927

29,826,875 23,693,885

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

2011RM’000

2010RM’000

(v) By economic purposes: Personal use 3,201,548 1,726,286 Credit card 111,842 90,472 Construction 1,014,686 759,803 Residential property 7,375,048 5,673,643 Non-residential property 1,926,886 1,651,458 Purchase of fixed assets other than land and building 428,357 391,915 Purchase of securities 10 20,606 Purchase of transport vehicles 5,551,562 5,252,944 Working capital 7,339,091 7,473,576 Other purpose 2,877,845 653,182

29,826,875 23,693,885

(vi) By geographical distribution: Malaysia 28,353,137 22,739,752 Indonesia 1,158,232 614,211 Other countries 315,506 339,922

29,826,875 23,693,885

(vii) Impaired financing, advances and other financing/loans by economic purposes: Personal use 19,240 17,165 Residential property 89,593 86,362 Non-residential property 27,302 16,131 Purchase of fixed assets other than land and building 1,154 1,738 Purchase of securities 3 19,364 Purchase of transport vehicles 99,353 86,560 Working capital 218,837 106,523 Credit cards 4,506 2,616 Other purpose 12,644 5,714

472,632 342,173

(viii) Impaired financing, advances and other financing/loans by geographical distribution: Malaysia 441,331 335,879 Indonesia 31,301 6,294

472,632 342,173

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

2011RM’000

2010RM’000

(ix) Movements in impaired financing, advances and other financing/loans: At 1 January 342,173 506,348 Classified as impaired during the financial year 505,090 345,743 Reclassified as not impaired during the financial year (127,965) (174,234) Amount recovered (90,543) (121,239) Amount written off (130,641) (87,164) Sale of impaired financing – (105,739) Exchange fluctuation (25,482) (21,542)

At 31 December 472,632 342,173

Ratio of gross impaired financing, advances and other financing/loans to gross financing, advances and other financing/loans 1.58% 1.44%

(x) Movements in allowance for impaired financing/bad and doubtful financing: Individual impairment allowance

At 1 January 97,021 272,235 Amount made/(written back) in respect of recoveries 48,229 (93,419) Amount written off (8,135) (77,163) Unwinding income (1,477) (2,622) Amount transferred from portfolio impairment allowance 3,001 2,899 Exchange fluctuation 1,136 (4,909)

At 31 December 139,775 97,021

Portfolio impairment allowance

At 1 January 246,352 264,540 Allowance made during the financial year 143,075 168,430 Amount written off (119,912) (61,605) Unwinding income (4,181) (1,838) Amount transferred to individual impairment allowance (3,001) (2,899) Allowance transferred from/(to) intercompany 166,234 (119,980) Exchange fluctuation 99 (296)

At 31 December 428,666 246,352

Portfolio impairment allowance (inclusive of regulatory reserve) as % of gross financing, advances and other financing/loans (excluding RPSIA financing) less individual impairment allowance 2.21% 2.16%

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(h) Deferred taxation Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and

when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position:

2011RM’000

2010RM’000

Portfolio impairment allowance for bad and doubtful financing 27 – Accelerated tax depreciation (839) (809) Revaluation reserve financial investments available-for-sale (2,756) (1,694) Other temporary differences 11,603 8,092

Deferred tax assets 8,035 5,589

The movements in deferred tax assets and liabilities during the financial year comprise the following:

Deferred tax assets/(liabilities) Note

Portfolio impairment allowance/

general allowance for

bad and doubtful

financingRM’000

Accelerated tax

depreciationRM’000

Financial investments

available- for-saleRM’000

Other temporary

differencesRM’000

TotalRM’000

2011 At 1 January – (809) (1,694) 8,092 5,589 (Credited)/charged to profit or loss (aa) 27 (8) – 2,689 2,708 Under/(over) provision in prior year – (22) – 822 800 Transferred to equity – – (1,062) – (1,062)

At 31 December 2011 27 (839) (2,756) 11,603 8,035

2010 At 1 January 46,541 (912) (65) 14,175 59,739 (Credited)/charged to profit or loss (aa) (46,541) 39 – (5,377) (51,879) Under/(over) provision in prior year – 64 – (706) (642) Transferred to equity – – (1,629) – (1,629)

At 31 December 2010 – (809) (1,694) 8,092 5,589

(i) Statutory deposits with Bank Negara Malaysia The statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 26(2)(c) of the Central Bank of Malaysia Act, 2009,

the amounts of which are determined at set percentages of total eligible liabilities.

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(j) Property, plant and equipment

Note

Renovations, office

equipment, furniture and

fittingsRM’000

MotorvehiclesRM’000

Computer equipment

and software under lease

RM’000Total

RM’000

2011 Cost At 1 January 14,955 1,017 4,569 20,541 Additions 3,007 1,597 1,252 5,856 Reclassifed to conventional banking (854) – (470) (1,324) Reclassified to intangible assets (m) (474) – – (474) Disposals (19) (25) – (44) Exchange fluctuation (1,536) – 1,712 176

At 31 December 15,079 2,589 7,063 24,731

Accumulated depreciation At 1 January 10,129 478 2,620 13,227 Charge for the financial year 1,619 190 1,123 2,932 Reclassified to conventional banking (577) – (465) (1,042) Disposals (19) (24) – (43) Exchange fluctuation (423) 1 512 90

At 31 December 10,729 645 3,790 15,164

Net book value at 31 December 4,350 1,944 3,273 9,567

2010 Cost At 1 January 12,387 450 4,629 17,466 Additions 4,036 569 – 4,605 Reclassifications 8 – (8) – Reclassified to intangible assets (m) (832) – – (832) Exchange fluctuation (644) (2) (52) (698)

At 31 December 14,955 1,017 4,569 20,541

Accumulated depreciation At 1 January 7,993 286 2,574 10,853 Charge for the financial year 2,475 192 100 2,767 Reclassifications 4 – (4) – Exchange fluctuation (343) – (50) (393)

At 31 December 10,129 478 2,620 13,227

Net book value at 31 December 4,826 539 1,949 7,314

The above property, plant and equipment include renovations and computer equipment and software under construction at cost of RM Nil (2010: RM Nil).

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(k) Other assets

2011RM’000

2010RM’000

Deposits and prepayments 150 308 Clearing accounts 93,086 212,214 Collateral pledged for derivative transactions 52,090 68,470 Sundry debtors 399,873 483,117

545,199 764,109

(l) Goodwill

2011RM’000

2010RM’000

At 1 January/31 December 136,000 136,000

Goodwill is wholly allocated to the retail banking cash-generating unit (‘CGU’).

The recoverable amount of the CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on the 2012 financial budgets approved by management, projected for 5 years based on the average to year historical Gross Domestic Product (‘GDP’) growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond the five-year period are extrapolated using an estimated growth rate of 5.00% (2010: 5.00%). The discount rate is 8.72% (2010: 8.89%) which reflects the specific risks relating to the CGU.

Management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of any CGU to exceed its recoverable amount.

(m) Intangible assets

Note2011

RM’0002010

RM’000

Computer software Cost At 1 January 15,979 12,338 Additions 689 2,809 Reclassified from property, plant and equipment (j) 474 832

At 31 December 17,142 15,979

Accumulated amortisation At 1 January 11,692 8,662 Charge for the financial year 1,280 3,030

At 31 December 12,972 11,692

Net book value at 31 December 4,170 4,287

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(m) Intangible assets (Continued) The above intangible assets include computer software under construction at cost of RM77,000 (2010: RM479,000).

The remaining amortisation period of the intangible assets are as follows:

Computer software – core and front-end systems 3 – 15 years – others 3 years

(n) Deposits from customers

2011RM’000

2010RM’000

(i) By type of deposits Non-Mudharabah

Demand deposits 3,204,849 3,055,079 Savings deposits 1,169,598 821,968 General investment deposits 419,745 634,517 Commodity Murabahah 440,600 69,379 Fixed return investment account 5,564,248 5,127,333 Islamic negotiable instruments of deposit 2,510,276 1,033,019 Variable rate deposits 77,340 378,330 Equity linked sukuk 286,629 219,600 Others 4,032,419 25,192

17,705,704 11,364,417

Mudharabah

Demand deposits 2,550,795 1,497,380 Savings deposits 478,449 328,971 General investment deposits 2,086,941 1,806,223 Special general investment deposits 6,987,965 7,574,239 Specific investment deposits 1,755,961 2,352,764

13,860,111 13,559,577

31,565,815 24,923,994

(ii) By type of customer Government and statutory bodies 5,454,140 5,809,043 Business enterprises 16,838,238 13,040,210 Individuals 5,044,236 4,585,316 Others 4,229,201 1,489,425

31,565,815 24,923,994

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(o) Deposits and placements of banks and other financial institutions

2011RM’000

2010RM’000

Licensed banks 9,497,898 9,561,426 Licensed investment banks 853,083 571,200 Other financial institutions 375,387 111,889

10,726,368 10,244,515

(p) Provision for taxation and Zakat

2011RM’000

2010RM’000

Taxation 111,723 79,730 Zakat 607 6,554

112,330 86,284

(q) Other liabilities

2011RM’000

2010RM’000

Clearing accounts 215,259 327,463 Due to brokers and clients – 128 Accruals and other payables 790,273 525,882

1,005,532 853,473

(r) Subordinated Sukuk The RM550 million subordinated Sukuk (‘the Sukuk’) is part of the Tier-2 Junior Sukuk programme which was approved by the Securities

Commission on 22 May 2009. Under the programme, CIMB Islamic Bank is allowed to raise Tier-2 capital of up to RM2.0 billion in nominal value outstanding at any one time.

The Sukuk of RM300 million under the first issuance was issued at par on 25 September 2009 and is due on 25 September 2024, with optional redemption on 25 September 2019 or any periodic payment date thereafter. The Sukuk bears a profit rate of 5.85% per annum payable semi-annually in arrears.

The second tranche of the Sukuk of RM250 million was issued at par on 21 April 2011 and is due on 21 April 2021. The Sukuk bears a profit rate of 4.20% per annum payable semi-annually in arrears.

The RM550 million Sukuk qualify as Tier-2 capital for the purpose of the RWCR computation.

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(s) Ordinary share capital and perpetual preference shares

2011RM’000

2010RM’000

Authorised Ordinary shares of RM1.00 each: At 1 January/31 December 900,000 900,000

Issued and fully paid Ordinary shares of RM1.00 each: At 1 January 750,000 550,000 Issued during the financial year 250,000 200,000

At 31 December 1,000,000 750,000

Perpetual preference shares Authorised Perpetual preference shares of RM1.00 each At 1 January/31 December 100,000 100,000

Issued and fully paid Perpetual preference shares of RM1.00 each At 1 January/31 December 70,000 70,000

(t) Reserves(a) The statutory reserve is maintained in compliance with Section 15 of the Islamic Banking Act, 1983 and is not distributable as cash

dividends.

(b) Regulatory reserves are maintained as an additional credit risk absorbent to ensure robustness on the financing impairment assessment methodology with the adoption of FRS 139 beginning 1 January 2010.

(c) Share-based payment reserve represents the Bank’s commitments for Management Equity Scheme and Employee Ownership Plan under share-based compensation benefits.

(u) Income derived from investment of depositors’ funds and others

2011RM’000

2010RM’000

Income derived from investment of:

(i) General investment deposits 798,533 770,417

(ii) Specific investment deposits 325,387 436,896

(iii) Other deposits 693,107 386,687

1,817,027 1,594,000

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(u) Income derived from investment of depositors’ funds and others (Continued)

2011RM’000

2010RM’000

(i) Income derived from investment of general investment deposits Finance income and hibah: Financing, advances and other financing/loans – income other than recoveries 612,738 508,886 – unwinding income* 2,198 2,870 Financial assets held for trading 9,843 15,352 Financial investments available-for-sale 12,820 11,526 Financial investments held-to-maturity 15,367 6,906 Money at call and deposit with financial institutions 73,498 82,629

726,464 628,169 Accretion of discount less amortisation of premium 12,174 16,374

738,638 644,543

Other operating income: Net loss from foreign exchange transactions (14,863) (353) Net gain from sale of financial investments available-for-sale 3,098 287 Net loss from sale of financial investments held-to-maturity (104) (100) Net gain/(loss) from financial assets held for trading – realised 2,332 1,358 – unrealised (1,233) 676

(10,770) 1,868

Fees and commission income: Fee on financing and advances 13,673 27,048 Guarantee fees 3,457 2,892 Service charges and fees 3,450 3,579

20,580 33,519

Other income: Sundry income 50,085 90,487

798,533 770,417

* Unwinding income is income earned on impaired financial assets

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(u) Income derived from investment of depositors’ funds and others (Continued)

2011RM’000

2010RM’000

(ii) Income derived from investment of specific investment deposits Finance income and hibah: Financing, advances and other financing/loans – income other than recoveries 233,922 349,922 Money at call and deposit with banks and other financial institutions 64,135 42,657 Financial investments held-to-maturity 27,330 44,317

325,387 436,896

(iii) Income derived from investment of other deposits Finance income and hibah: Financing, advances and other financing/loans – income other than recoveries 573,767 303,848 – unwinding income* 2,568 1,781 Financial assets held for trading 8,325 7,678 Financial investments available-for-sale 12,580 7,967 Financial investments held-to-maturity 12,687 3,907 Money at call and deposit with banks and other financial institutions 79,641 50,263

689,568 375,444 Accretion of discount less amortisation of premium 11,555 11,226

701,123 386,670

Other operating income: Net gain from sale of financial investments available-for-sale 3,827 218 Net (loss)/gain from financial assets held for trading – realised 812 (487) – unrealised (152) (409) Net loss from sale of financial investments held-to-maturity (136) (70) Net loss from foreign exchange transactions (16,530) (1,130)

(12,179) (1,878)

Fees and commission income: Guarantee fees 4,163 1,895

693,107 386,687

* Unwinding income is income earned on impaired financial assets

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(v) Net income derived from investment of shareholders’ funds

2011RM’000

2010RM’000

Finance income and hibah: Financing, advances and other financing/loans – income other than recoveries 121,917 90,336 – unwinding income * 261 192 Financial investments available-for-sale 1,293 1,524 Financial assets held for trading 924 948 Financial investments held-to-maturity 21,196 13,298 Money at call and deposit with financial institutions 30,533 25,868

176,124 132,166 Accretion of discount less amortisation of premium 1,413 1,369

177,537 133,535

Other operating income: Net gain/(loss) from financial assets held for trading – realised 118 (5) – unrealised (46) (20) Net gain from sale of financial investments available-for-sale 312 25 Net loss from sale of financial investments held-to-maturity (10) (7) Net gain/(loss) from Islamic derivative financial instruments – realised 83,197 214,157 – unrealised (35,237) (193,477) Net (loss)/gain from foreign exchange transactions (1,741) 612 Net gain from hedging derivatives 4,271 –

50,864 21,285

Net fees and commission income: Fees on financing, advances and other financing/loans 20,803 37,979 Advisory fees 15,239 6,985 Guarantee fees 12,476 15,615 Service charges and fees 63,026 4,278 Placement fees 37,028 104,872 Underwriting commission 4,299 7,620 Others 3,880 4,795

Fee and commission income 156,751 182,144 Fee and commission expense (1,961) (1,430)

Net fees and commission income 154,790 180,714 Sundry income 7,032 8,317

390,223 343,851

* Unwinding income is income earned on impaired financial assets

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(w) Allowance for impairment losses on financing, advances and other financing/loans

2011RM’000

2010RM’000

Allowance for impaired financing/bad and doubtful debts and financing:

(i) Individual impairment allowance – made/(written back) during the financial year 48,229 (93,419)

(ii) Portfolio impairment allowance – made during the financial year 143,075 168,430

Bad debts on financing: – recovered (39,940) (20,900) – written-off 2 5

151,366 54,116

(x) Income attributable to depositors

2011RM’000

2010RM’000

Deposits from customers – Mudharabah 335,555 321,501 – Non-Mudharabah 275,695 140,254 Deposits and placements of banks and other financial institutions – Mudharabah 41,524 30,214 – Non-Mudharabah 10,025 8,387 Others 74,130 107,459

736,929 607,815

(y) Personnel expenses

2011RM’000

2010RM’000

– salaries, allowances and bonuses 64,349 36,462 – outsourced personnel expenses 133,948 79,194 – others 20,848 20,269

219,145 135,925

Included in the personnel costs are fees paid to the Shariah Committee members amounting to RM772,766 (2010: RM655,500).

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54 THE OPERATIONS OF ISLAMIC BANkING (CONTINUED)

(z) Other overheads and expenditures

2011RM’000

2010RM’000

Establishment costs – rental 2,761 3,469 – depreciation of property, plant and equipment 2,932 2,767 – outsourced establishment costs 60,044 37,920 – others 6,772 6,964

72,509 51,120

Marketing expenses – advertisement and publicity 3,791 8,002 – outsourced marketing costs 8,496 16,544 – others 2,893 4,784

15,180 29,330

Administration and general expenses – legal and professional fees 2,215 2,430 – amortisation of intangible assets 1,280 3,030 – outsourced administration and general expenses 29,567 21,577 – others 29,294 39,651

62,356 66,688

150,045 147,138

(aa) Taxation

Note2011

RM’0002010

RM’000

(i) Tax expense for the financial year Current year tax – Malaysian income tax 236,841 164,088 Deferred taxation (h) (2,708) 51,879 (Over)/under accrual in prior year (713) 2,782

233,420 218,749

(ii) Numerical reconciliation of income tax expense The explanation on the relationship between tax expense and profit before taxation is as follows:

Profit before taxation 947,019 992,723

Tax calculated at tax rate of 25% 236,755 248,181 – effect of different tax rates 4,328 (24,445) – income not subject to tax (8,744) (8,622) – expenses not deductible for tax purposes 1,794 853 (Over)/under accrual in prior year (713) 2,782

233,420 218,749

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Notes to the Financial Statementsfor the financial year ended 31 December 2011

55 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The Financial Statements have been authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 12 March 2012.

56 REALISED AND UNREALISED PROFITS

The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010 and the directive of Bursa Malaysia Securities Berhad.

The marked-to-market gains and losses on derivative contracts and financial investments at fair value through profit or loss that remain outstanding in the financial statements of the Group as at 31 December 2011 and 31 December 2010 are deemed unrealised and should be read together as it reflects the nature of the transactions and financial positon of the Group. In addition, the unrealised retained earnings of the Group as disclosed above excludes the translation gains and losses on monetary items denominated in a currency other than the functional currency, as these gains and losses are incurred in the ordinary course of business of the Group, and are hence deemed as realised.

The Group The Company

2011RM’000

2010RM’000

2011RM’000

2010RM’000

Total retained earnings of the Group and subsidiaries – Realised 8,555,184 5,372,164 1,264,347 1,270,568 – Unrealised 268,222 371,480 17,524 (6,753)

8,823,406 5,743,644 1,281,871 1,263,815 Total share of retained earnings from associates – Realised 158,721 50,400 – – – Unrealised 26,503 786 – –

Total share of retained earnings from jointly controlled entities – Realised 29,932 13,306 – – – Unrealised 677 310 – –

9,039,239 5,808,446 1,281,871 1,263,815 Consolidation adjustments (216,384) 1,029,733 – –

Total group retained earnings as per consolidated financial statements 8,822,855 6,838,179 1,281,871 1,263,815

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ABBREVIATIONS

A-IRB Approach : Advanced Internal Ratings Based Approach

BAFIA : Banking and Financial Institutions Act 1989

BI : Banking Institutions

BNM : Bank Negara Malaysia

BRC : Board Risk Committee

BSMC : Balance Sheet Management Committee

CaR : Capital-at-Risk

CAFIB : Capital Adequacy Framework for Islamic Banks

CBCC : Consumer Bank Credit Committee

CBSM : Capital and Balance Sheet Management

CBTM : Corporate Banking, Treasury and Markets

CCR : Counterparty Credit Risk

CIMBBG : CIMB Bank, CIMB Islamic Bank Berhad, CIMBTH, CIMB Bank PLC (Cambodia) and CIMB Factorlease Berhad

CIMBIBG : Consist of CIMB Investment Bank Berhad and CIMB Futures Sdn Bhd

CIMBGH Group : Group of Companies under CIMB Group Holdings Berhad

CIMBTH : CIMB Thai Bank Public Company Ltd and its subsidiaries

CIMB Bank : CIMB Bank Berhad and CIMB Bank (L) Ltd (as determined under the RWCAF to include its wholly owned offshore banking subsidiary company)

CIMB Group or the Group : Collectively CIMBBG, CIMBIBG and CIMB Islamic as described within this Report

CIMB IB : CIMB Investment Bank Berhad

CIMB Islamic : CIMB Islamic Bank Berhad

CRM : Credit Risk Mitigants

CSA : Credit Support Annexes, International Swaps and Derivatives Association Agreement

DFIs : Development Financial Institutions

EAD : Exposure At Default

EaR : Earnings-at-Risk

ECAIs : External Credit Assessment Institutions

EL : Expected Loss

EP : Eligible Provision

EVE : Economic Value of Equity

EWRM : Enterprise Wide Risk Management

Group EXCO : Group Executive Committee

F-IRB Approach : Foundation Internal Ratings Based Approach

Fitch : Fitch Ratings

GC : Group Credit

GRC : Group Risk Committee

GRD : Group Risk Division

GRM : Group Risk Management

GWBRC : Group Wholesale Bank Risk Committee

HPE : Hire Purchase Exposures

IRB Approach : Internal Ratings Based Approach

IRRBB : Interest Rate Risk in the Banking Book

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ABBREVIATIONS (CONTINUED)

KRI : Key Risk Indicators

LGD : Loss Given Default

MARC : Malaysian Rating Corporation Berhad

MDBs : Multilateral Development Banks

MATs : Management Action Triggers

Moody’s : Moody’s Investors Service

MTM : Mark-to-Market and/or Mark-to-Model

ORC : Operational Risk Committee

ORM : Operational Risk Management

ORMD : Operational Risk Management Department

ORMF : Operational Risk Management Framework

OTC : Over the Counter

PD : Probability of Default

PSEs : Non-Federal Government Public Sector Entities

PSIA : Profit Sharing Investment Accounts

QRRE : Qualifying Revolving Retail Exposures

R&I : Rating and Investment Information, Inc

RAM : RAM Rating Services Berhad

RAROC : Risk Adjusted Return on Capital

RCC : Regional Credit Committee

RCM : Regional Credit Management

RCSA : Risk and Control Self Assessments

RLRC : Regional Liquidity Risk Committee

RMA : Risk Management & Analytics

RMO : Risk Middle Office

RORBB : Rate of Return Risk in the Banking Book

RRE : Residential Real Estate

RWA : Risk Weighted Assets

RWCAF : Risk Weighted Capital Adequacy Framework (Basel II)

RWCR : Risk Weighted Capital Ratio

S&P : Standard & Poor’s

SA : Standardised Approach

SBCC : Singapore Business Credit Committee

SCF : Shariah Compliance Framework

SMEs : Small and Medium Enterprises

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Basel II Pillar 3 Disclosuresfor 2011

OVERVIEw OF BASEL II AND PILLAR 3

Basel II Regulatory Capital Framework seeks to increase the risk sensitivity in capital computations and prescribed a number of different approaches to risk calculation that allows the use of internal models to calculate regulatory capital. The particular approach selected must commensurate with the financial instituition’s risk management capabilities. The Basel II requirements are stipulated within three broad ‘Pillars’ or sections.

Pillar 1 focuses on the minimum capital measurement methodologies and their respective qualifying criteria to use specified approaches available to calculate the RWA for credit, market and operational risks. Since 1 July 2010, CIMB Bank and its subsidiaries, CIMB IB and its subsidiaries and CIMB Islamic (collectively known as ‘CIMB Group’ or the ‘Group’ for purpose of this disclosure) have been applying the IRB Approach for its major credit exposures. The IRB Approach prescribes two approaches, the F-IRB Approach and A-IRB Approach. Under F-IRB Approach, the Group applies its own PD and the regulator prescribed LGD, whereas under the A-IRB Approach, the Group applies its own risk estimates of PD, LGD and EAD.

Subsequent to the transition to Basel II IRB Approach in 2010, and following a refinement in the interpretation of the guideline, management is of the opinion that it is proved to be impractical to apply IRB Approach due to lack of IRB assets in CIMBIBG. In November 2011, the Group has adopted the SA for CIMBIBG to better reflect the nature of the underlying business activities. The change does not in any way affect how business is conducted at CIMBIBG and will in fact; maintain the efficient employment of capital at the Group. For purposes of this disclosure, CIMBIBG has re-presented the credit RWA under the SA for the year ended 31 December 2010 to provide better representation on comparative information.

Pillar 2 focuses on how sound risk management practices should be implemented from the Supervisory Review perspective. It requires financial institutions to make their own assessments of capital adequacy in light of their risk profile and to have a strategy in place for maintaining their capital levels. In light of BNM’s guidelines on the RWCAF – Internal Capital Adequacy Assessment Process (Pillar 2) and CAFIB – Internal Capital Adequacy Assessment Process (Pillar 2), a comprehensive self assessment to evaluate existing capital and risk management practices against the expectations set forth in the BNM’s guidelines was conducted and development of action plans to close any gaps has been submitted to BNM in June 2011.

Pillar 3 complements Pillar 1 and Pillar 2 by presenting disclosure requirements aimed to encourage market discipline in a sense that every market participants can assess key pieces of information attributed to the capital adequacy framework of financial institutions. These disclosures herein are formulated in accordance with the requirements of BNM’s guidelines on RWCAF – Disclosure Requirements (Pillar 3) and CAFIB – Disclosure Requirements (Pillar 3).

The qualitative disclosures in this Report are required to be updated on an annual basis and more frequently if significant changes to policies are made. The capital structure and adequacy disclosures are published on a quarterly basis. All other quantitative disclosures are published semi-annually in conjunction with the Group’s half yearly reporting cycles. These disclosures are also available on the Group’s corporate website (www.cimb.com). The individual disclosures for CIMB Bank and CIMB IB are also available at the CIMBGH Group’s corporate website.

All these disclosures published are for the year ended 31 December 2011. The basis of consolidation for financial accounting purposes is described in the 2011 financial statements. The capital requirements are generally based on the principles of consolidation adopted in the preparation of financial statements with the exception of subsidiaries engaged in non-financial activities which have been excluded from the regulatory consolidation and have been deducted from regulatory capital. During the financial year, the Group did not experience any impediments in the distribution of dividends. There were also no capital deficiencies in any subsidiaries that are not included in the consolidation for regulatory purposes.

The term ‘credit exposure’ as used in this report is a prescribed definition by BNM based on the RWCAF – Disclosure Requirements (Pillar 3) and CAFIB – Disclosure Requirements (Pillar 3). Credit exposure is defined as the estimated maximum amount a banking institution may be exposed to a counterparty in the event of a default or EAD. This differs with similar terms applied in the 2011 financial statements as the credit risk exposure definition within the ambit of accounting standards represent the balance outstanding as at balance sheet date and do not take into account the expected undrawn contractual commitments. Therefore, information within this Report is not directly comparable to that of the 2011 financial statements.

Any discrepancies between the totals and sum of the components in the tables contained in this disclosure are due to actual summation method and then rounded up to the nearest thousands.

These disclosures have been reviewed and verified by internal auditors and approved by the Board of Directors of CIMBGH Group.

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Table of Contents

250 Risk Management Overview

253 Shariah Governance Disclosure

253 Capital Management

263 Credit Risk

282 Credit Risk – Disclosure for Portfolios

Under the Standardised Approach (SA)

288 Credit Risk – Disclosure for Portfolios

Under the IRB Approach

297 Credit Risk Mitigation

303 Off Balance Sheet Exposures and CCR

311 Securitisation

323 Market Risk – SA

324 Operational Risk

325 Equity Exposures in Banking Book

327 Interest Rate Risk/Rate of Return Risk in

the Banking Book (IRRBB/RORBB)

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RISk MANAGEMENT OVERVIEw

Risk management is an integral component of the Group’s business, operations and decision-making process. In ensuring that the Group achieves optimum returns whilst operating within a sound business environment, GRD is involved at the early stage of the risk taking process by providing independent inputs such as the relevant valuations, credit evaluations, new product assessments and CaR quantifications. These inputs enable business units to align their business strategies with the Group’s risk appetite.

The objectives of CIMB Group’s risk management activities are to:

• Identify the various risk exposures and risk capital requirements;

• Ensure risk taking activities are consistent with risk policies and the aggregated risk position are within the risk appetite as approved by the Board; and

• Create shareholder value through proper allocation of risk capital and facilitate development of new business and products.

Enterprise wide Risk Management FrameworkCIMB Group employs the EWRM framework to manage its risk and opportunity effectively. It is an on-going process of identifying, evaluating, monitoring, managing and reporting significant risks affecting the Group implemented through various Board appointed committees.

The key components of the Group’s EWRM framework are represented in the diagram below:

GOVERNANCE

ECONOMIC CAPITAL FRAMEwORk REGULATORY CAPITAL FRAMEwORk – RISk wEIGHTED ASSETS

RISk MANAGEMENT LIMITS & CONTROLS RISk ANALYSIS & REPORTING STRESS TESTING

The framework is centered on resilient risk and capital management framework which requires the Group to identify, evaluate, measure, mitigate and monitor/report its material risks, and relate these to its capital requirements and at all times ensure capital adequacy. The Group employs CaR as the common and consistent measurement of risk across CIMB Group. The CaR framework provides the basis of allocating economic capital within the Group. It provides a benchmark to facilitate the comparison of risk across business units and risk types. This enables the Group to consider both the downside risk, for risk protection and upside potential, for earnings growth. Hence, allowing the Group to measure the performance of each business on an absolute basis (economic profit) and relative percentage return basis (RAROC) against the Group’s costs of capital.

Strong risk governance holds the EWRM together. The Board of Directors through the BRC is ultimately responsible for the implementation of EWRM. GRD has been principally tasked to assist the various committees and undertakes the performance of the day-to-day risk management functions of the EWRM. The implementation of the EWRM is subjected to the independent assurance and assessment by the Group Internal Audit.

The foundation of the EWRM is made up of three major building blocks, which are Limits and Controls, Analysis and Reports, and Stress Testing. Limits constitute the key mechanism to control allowable risk taking activities and are regularly reviewed in the face of changing business needs, market conditions, and regulatory changes. Timely reports and meaningful analysis of risk positions are critical to enable the Board and its management to exercise control over all exposures and make informed business decisions.

Stress testing involves identifying possible events or future changes in the financial and economic conditions that could have unfavourable effects on the Group’s exposure and the assessment of the Group’s ability to withstand such changes, usually in relation to the capacity of its capital and earnings to absorb potentially significant losses as well as the sufficiency of its liquidity surplus and reserves. Steps are then identified to manage risk and conserve capital. Group wide stress test is performed semi-annually while stress tests on selected portfolios are performed on an ad hoc basis.

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RISk MANAGEMENT OVERVIEw (CONTINUED)

Risk GovernanceThe BRC assumes the ultimate responsibility on behalf of the boards of directors for the supervision of risk management within CIMB Group. In line with best practices, the BRC determines the risk policy objectives and also decides on the yearly allocation of risk capital to support all risks taken by the Group.

GRC is the primary delegated authority for managing risk on a group-wide basis and reports directly to BRC. Sub-committees, namely GWBRC, CBCC, RCC, SBCC, RLRC and ORC, delegated from the GRC are set up to manage and control specific risk areas. In relation to IRRBB/RORBB, GRC is further assisted by BSMC that is responsible for recommending and executing strategies and hedging proposals for the banking book as well as ensuring the Group’s interest rate/rate of return risk profile is within the risk limits/MATs endorsed by GRC. With this set-up, the Board and BRC through the various risk committees and BSMC maintain oversight of various risks across the Group.

Each committee is chaired by a director respectively. The composition of the committees includes senior management and individuals from business divisions as well as divisions which are independent from the business units. BRC reviews the composition of these committees except for BSMC, to reflect a balance of experienced independent and non-independent individuals with the necessary skills and qualifications to carry out the roles and responsibilities of the relevant committee.

The chart below sets out the organisational structure of the risk management committees overseeing risk management activities and an overview of the respective committee’s roles and responsibilities:

BOARD OF DIRECTORS

BOARD RISk COMMITTEE

• Review and recommend risk policies and strategies for approval• Oversee entire EWRM and provide strategic guidance to various risk committees

GROUP RISk COMMITTEE

• Review and advise on risk policies and strategies• Overseemanagement of risk, capital allocation and asset liabilitymanagement processes across our Group

Group wholesale Bank Risk Committee (GwBRC)

Consumer Bank Credit Committee

(CBCC)

Regional Credit Committee (RCC)

Singapore Business Credit

Committee (SBCC)

Regional Liquidity Risk Committee

(RLRC)

Operational Risk Committee (ORC)

Balance Sheet Management Committee

(BSMC)

• OverseeGroup’sexposures to market risks

• Evaluate and approveproposals for primary and secondary market deals for debt and equity instruments

• Credit approvalauthority for Malaysian centric cases

• Assign and review theMalaysian Sectorial Exposures

• Review and approveGlobal Banking Institutions Limits for Malaysian centric banking groups

• Credit approvalauthority for Malaysian centric cases

• EnsuringGroup overallloan portfolio/financing meets regulatory guidelines and approved internal policies and procedures

• Oversee thedevelopment of credit policies and procedures, encompassing all products and businesses within Consumer Banking

• Review and approveor concur non-Malaysian centric cases

• EnsuringGroup overallloan portfolio/financing meets regulatory guidelines and approved internal policies and procedures

• Review and approveor concur all non-Malaysian Interbank Limit, Global FI Counterparty Limits and Global Country Limit

• Credit approvalauthority for non-Malaysian centric cases

• EnsuringGroup overallloan portfolio/financing meets regulatory guidelines and approved internal policies and procedures

• Oversee theGroup’soverall liquidity management

• EnsureGroup is ableto meet its cash flow obligations in a timely and cost effective manner

• Oversee operationalrisk management in terms of best practices, policies and risk tolerance

• Review controls andaction plans to address identified risks

• Oversight on allBusiness Continuity Management (BCM)/ Disaster Recovery (DR) activities

• Review balance sheetpositions

• Recommend andexecuting balance sheet strategies and hedging

• Ensure risk profile iskept within the established risk appetite/limits/MAT

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RISk MANAGEMENT OVERVIEw (CONTINUED)

The overseas subsidiaries’ risk committees are set-up in a similar structure in their respective jurisdictions. Whilst recognising the autonomy of the local jurisdiction and compliance to local requirements, the Group strives to ensure a consistent and standardised approach in its risk governance process. As such, the relevant Group and Regional committees have consultative and advisory responsibilities on regional matters across the Group. This structure increases the regional communication, sharing of technical knowledge and support towards managing and responding to risk management issues, thus allowing the Board to have a comprehensive view of the activities within the Group.

The roles of Group Risk DivisionThe primary oversight body for risk management activities is GRD, comprising GRM, GC and RCM, which are independent of business units and assist the Group’s management and the various risk committees in monitoring and controlling the Group’s risk exposures.

The key responsibilities of GRD are to identify, evaluate, analyse, monitor and review the principal risks to which the Group is exposed. It also helps to create shareholder value through proper allocation of risk capital, development of risk-based pricing framework and facilitate development of new businesses and products. The Head of GRD also maintains an oversight functions performed by the risk management units in the asset management and insurance/takaful subsidiaries.

In ensuring a standardised approach to risk management across the Group, all risk management teams within the Group are required to conform to the Group’s EWRM framework, subject to necessary adjustments required for local regulations. For branches and subsidiaries without any risk management outfit, all risk management activities will be centralised at GRD. Otherwise, the risk management activities will be performed by the local risk management team with matrix reporting line to GRD.

• GroupRiskManagement GRM monitors risk-taking activities, initiates and proposes risk policies, risk measurement methodologies, risk limits and risk capital allocation, performs

independent review of loan/financing assets quality and loan/financing recovery plan, coordinates new products deployments and develops the risk-based product pricing framework for loan/financing portfolios.

In propagating and ensuring compliance to the market risk framework, GRM reviews treasury trading strategies, analyses positions and activities vis-à-vis changes in the financial market and performs mark-to-market as part of financial valuation.

GRM is also tasked with the co-ordination of the Group’s effort towards implementation of the Basel II framework in compliance with the International Convergence of Capital Measurement and Capital Standards prescribed by the Bank of International Settlements and as adopted by BNM. In this regard, GRM develops, implements and validates all internal rating and scoring models and closely monitors the usage of the rating and scoring systems to ensure relevancy to current market conditions and integrity of the ratings.

GRM adds value to business propositions by providing advice on market valuations, CaR quantifications and independent risk assessment. This enables the business units to prepare for the potential risks associated with the new transactions or business ventures and consequently, address the management and mitigation of such risks from the early stage of the proposition. The business units gain understanding of the risk-reward equation of the proposition, consider the risk factors in the pricing decision, and ensure that the projected returns from the business propositions commensurate with the risks taken. In order to ensure the independence of GRM in such an arrangement, GRM’s remuneration is not linked to the success of particular transactions or deals.

• GroupCredit GC carries out independent assessments and evaluations of all credit risk related proposals originating from the various business units such as loans/

financings and advances, fixed income, derivatives, sales and trading, prior to submission to the CBCC, GWBRC, the EXCO or Board for approval. GC ensures proper grouping of entities and counterparties under the single customer framework. GC also reviews the Bank’s holdings of all fixed income assets issued by Malaysian companies and recommends the internal ratings for GWBRC’s approval.

• Regional CreditManagement A regional credit platform was established with a primary objective of enhancing efficiency and effectiveness of the credit oversight as well as credit

approval process for all non-Malaysian centric Corporate and Financial Institutions at the CIMB Group level. The platform includes 2 credit committees, SBCC for smaller-sized exposures and RCC for larger regional exposures. All credit proposals submitted to the 2 credit committees for approval/concurrence are routed through RCM for independent assessment and due recommendation to the credit committees.

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RISk MANAGEMENT OVERVIEw (CONTINUED)

Strategies and Processes for Various Risk ManagementThese information are available in later sections for each Credit Risk, Market Risk, Operational Risk and Interest Rate Risk/Rate of Return Risk in the Banking Book.

SHARIAH GOVERNANCE DISCLOSURE

CIMBGH Group Shariah Compliance Framework or SCF is the enterprise-wide Shariah management plan consisting of Shariah governance structure, systems, processes and controls to be undertaken by relevant sections across the Group.

CIMBGH Group Shariah Compliance Policy and General Procedures Manual serves as a solid platform for all the processes under the SCF.

The implementation of the SCF is effected through the following functions:

• Shariah Advisory;

• Shariah Compliance review; and

• Shariah Audit.

The Shariah Committee of CIMB Islamic was established under the provision of Section 3(5)(b) of the Islamic Banking Act of 1983 to advise CIMB Islamic and CIMBGH Group on the operations of their Islamic banking and finance business in order to ensure that they do not involve any element which is not approved by Shariah.

In advising CIMB Islamic and CIMBGH Group, the Shariah Committee also adopts the view of Shariah advisory councils of BNM and Securities Commission from time to time.

The duties and responsibilities of Shariah Committee are to advise the Directors on the operations of the Islamic banking and finance business of CIMB Islamic and CIMBGH Group in order to ensure that they do not involve any element which is not approved by Shariah.

The roles of the Shariah Committee in monitoring the Islamic banking and finance activities of CIMB Islamic and CIMBGH Group are as follows:

• Review the products and services to ensure conformity with the Shariah principles;

• Deliberate on Shariah Issues pertaining to the day-to-day operations of the CIMB Islamic and CIMBGHGroup; and

• Advice on the payment of Zakat to the appropriate authority.

Rectification process of non-Shariah compliant income occurring during the yearA comprehensive review on the CIMB Islamic operational processes in financing transactions was conducted and finalised in year 2010. As a result, RM159,766 was identified as non-compliant income. All the identified non-Shariah compliant income recorded by CIMB Islamic has been channelled to the approved charitable bodies in the year 2011.

CAPITAL MANAGEMENT

key Capital Management PrinciplesThe key driving principles of CIMBGH Group’s capital management policies are to diversify its sources of capital to allocate capital efficiently, and achieve and maintain an optimal and efficient capital structure of the CIMBGH Group, with the objective of balancing the need to meet the requirements of all key constituencies, including regulators, shareholders and rating agencies.

The Bank sets an internal minimum capital adequacy target which is substantially above the minimum regulatory requirement. In establishing this internal capital adequacy target, the Bank considers many critical factors, including, amongst others, credit rating implication, current and future operating environment and peers comparisons. The capital management process is centrally supervised by the Group EXCO, GRC and BRC who periodically assess and review the capital requirements and source of capital across the Group, taking into account all on-going and future activities that consume or create capital, and ensuring that the minimum target for capital adequacy is met. Available capital is allocated across competing demands, guided by the predetermined policies, and to ensure regulatory compliance. Monthly updates on capital position of the CIMBGH Group and the Group are also provided to the Board of Directors.

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and AdequacyThe table below sets out the summary of the sources of capital and the capital adequacy ratios for CIMBBG, CIMBIBG and CIMB Islamic as at 31 December 2011 and 31 December 2010 respectively. The relevant entities under the Group issue various capital instruments pursuant to the respective regulatory guidelines, including Tier 2 subordinated debt, innovative and non-innovative tier 1 hybrid securities that qualify as capital pursuant to the RWCAF and CAFIB issued by BNM. Notes 27 to 29 in CIMBGH Financial Statement show the summary information of terms and conditions of the main features of capital instruments.

Table 1(a): Capital Position for CIMBBG

CIMBBG

(RM’000) 2011 2010

Tier 1 Capital Paid-up share capital + Share Premium 8,798,102 8,798,102 Non-Innovative Tier 1 instruments 1,200,000 1,200,000 Innovative Tier 1 instruments 1,635,400 1,616,700 Statutory Reserve 4,835,694 4,667,828 Retained Earnings/Profits 3,594,664 3,383,656 General Reserve Fund 263,347 – Interim Dividend – – Minority Interest 266,211 260,586

Less: Deductions from Tier 1 Capital Goodwill 4,899,903 4,923,428

Eligible Tier 1 Capital 15,693,514 15,003,444

Tier 2 Capital Subordinated Debt Capital 5,813,057 3,936,919 Cumulative Preference Shares 29,740 29,740 General Provision 887,918 499,471 Surplus of EP over EL 255,860 409,200

Tier 2 Capital Subject to Limits 6,986,575 4,875,330

Less: Deductions from Tier 2 capital 553,301 493,444 Investment in subsidiaries 136,135 175,352 Investment in capital instruments of other BI 347,051 247,976 Other Deductions 70,116 70,116Eligible Tier 2 Capital 6,433,273 4,381,886Total Eligible Capital 22,126,787 19,385,330

RwA Credit 109,351,226 104,892,665 Credit RWA Absorbed by PSIA – – Market 8,785,131 9,658,308 Operational 12,620,584 11,242,737 Large Exposure for Equity Holdings 400,148 360,424Total RwA 131,157,089 126,154,134

Capital Adequacy Ratios Tier 1 Capital Adequacy Ratio (%) 11.97% 11.89% Total Capital Adequacy Ratio (%) 16.87% 15.37%

Proposed Dividends (827,000) (600,903)

RwCR After Dividends Core Capital Ratio 11.33% 11.42% RWCR 16.24% 14.89%

RWCR after dividends increased from 14.89% to 16.24% mostly attributable to the new issuance of subordinated debt and sukuk by CIMB Bank and CIMB Islamic Bank amounting to RM1.5 billion and RM250 million respectively. This was slightly offset by the increase in Credit RWA mostly due to growth in the retail loans and advances. The decrease in Market RWA of approximately RM873 million between December 2010 and December 2011 was mainly due to the decrease in interest rate risk/benchmark rate risk, following the increase in hedges of the callable/puttable range accrual interest rate swaps in the option book in 2011.

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 1(b): Capital Position for CIMB Islamic

CIMB Islamic

(RM’000) 2011 2010

Tier 1 Capital Paid-up share capital + Share Premium 1,000,000 750,000 Non-Innovative Tier 1 instruments 70,000 70,000 Innovative Tier 1 instruments – – Statutory Reserve 452,388 284,522 Retained Earnings/Profits 311,492 216,069 General Reserve Fund 16,498 – Interim Dividend – – Minority Interest – –

Less: Deductions from Tier 1 Capital Goodwill 136,000 136,000

Eligible Tier 1 Capital 1,714,378 1,184,591

Tier 2 Capital Subordinated Debt Capital 550,000 300,000 Cumulative Preference Shares – – General Provision 123,697 38,297 Surplus of EP over EL – 17,577

Tier 2 Capital Subject to Limits 673,697 355,874

Less: Deductions from Tier 2 capital 18,719 – Investment in subsidiaries – – Investment in capital instruments of other BI – – Other Deductions 18,719 –Eligible Tier 2 Capital 654,979 355,874Total Eligible Capital 2,369,357 1,540,465RwA Credit 15,261,669 13,840,772 Credit RWA Absorbed by PSIA (584,091) (6,217,115) Market 346,673 285,115 Operational 1,402,324 1,041,278 Large Exposure for Equity Holdings – –Total RwA 16,426,575 8,950,050

Capital Adequacy Ratios Tier 1 Capital Adequacy Ratio (%) 10.44% 13.24% Total Capital Adequacy Ratio (%) 14.42% 17.21%

Proposed Dividends – –

RwCR After Dividends Core Capital Ratio 10.44% 13.24% RWCR 14.42% 17.21%

The RWCR after dividends decreased from 17.21% to 14.42% was mostly attributable to the increase in Credit RWA. The said increase was mostly attributable to the unwinding of Restricted Profit Sharing Investment Accounts arrangement on CIMB Islamic’s hire purchase portfolio where it was funded previously by CIMB Bank. The RWA for Market Risk increased mainly due to the increase in sukuk exposures in December 2011.

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 1(c): Capital Position for CIMBIBG

CIMBIBG

(RM’000) 2011 2010

Tier 1 Capital Paid-up share capital + Share Premium 100,000 100,000 Non-Innovative Tier 1 instruments – – Innovative Tier 1 instruments – – Statutory Reserve 155,175 155,175 Retained Earnings/Profits 152,377 137,237 General Reserve Fund 54,115 – Interim Dividend – – Minority Interest – –

Less: Deductions from Tier 1 Capital Goodwill – –

Eligible Tier 1 Capital 461,667 392,412

Tier 2 Capital Subordinated Debt Capital – – Cumulative Preference Shares 10 10 General Provision 623 650 Surplus of EP over EL – 209

Tier 2 Capital Subject to Limits 633 869

Less: Deductions from Tier 2 capital 50 50 Investment in subsidiaries 50 50 Investment in capital instruments of other BI – – Other Deductions – –Eligible Tier 2 Capital 583 819Total Eligible Capital 462,250 393,231RwA Credit 1,081,967 1,095,035 Credit RWA Absorbed by PSIA – – Market 307,315 192,321 Operational 807,424 765,308 Large Exposure for Equity Holdings – –Total RwA 2,196,706 2,052,644

Capital Adequacy Ratios Tier 1 Capital Adequacy Ratio (%) 21.02% 19.12% Total Capital Adequacy Ratio (%) 21.04% 19.16%

Proposed Dividends (99,034) (53,500)

RwCR After Dividends Core Capital Ratio 16.51% 16.51% RWCR 16.53% 16.55%

The decrease in RWCR after dividends from 16.55% to 16.53% was mostly attributable to the increase in proposed dividends, partially offset by an increase in retained earnings and general reserve fund which caused the capital base to grow. The RWA for Market Risk increased mainly due to the increase in underwriting exposure on rights issue in December 2011 as well as an increase in Foreign Currency Risk.

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)The tables below show the RWA under various exposure classes under the relevant approach and apply the minimum regulatory capital requirement at 8% to establish the minimum capital required for each of the exposure classes.

Table 2(a): Disclosure on Total RWA and Minimum Capital Requirement for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class

Net Exposurebefore CRM

(SA)/EAD(IRB)

Net Exposureafter CRM

(SA)/EAD(IRB) RwA

Total RwA after effects

of PSIA

Minimum capital

requirementat 8%

Credit RiskExposures under the SA Sovereign/Central Banks 47,234,212 47,234,212 150,930 150,930 12,074 Public Sector Entities 397,756 397,756 216,702 216,702 17,336 Banks, DFIs & MDBs 1,383,614 1,350,084 325,081 325,081 26,007 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 81 81 40 40 3 Corporate 14,071,622 13,276,803 13,372,131 13,372,131 1,069,770 Regulatory Retail 26,315,110 21,657,731 16,659,594 16,659,594 1,332,767 Residential Mortgages/RRE Financing 5,036,365 5,036,365 1,838,728 1,838,728 147,098 Higher Risk Assets 1,231,512 1,231,512 1,847,268 1,847,268 147,781 Other Assets 5,770,276 5,770,276 2,995,310 2,995,310 239,625 Securitisation 786,438 786,438 156,982 156,982 12,559

Total for SA 102,226,986 96,741,257 37,562,765 37,562,765 3,005,021

Exposures under the IRB Approach Sovereign/Central Banks – – – – – Public Sector Entities – – – – – Banks, DFIs & MDBs 18,834,192 18,834,192 5,432,134 5,432,134 434,571 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – – Corporate 60,604,067 60,604,067 31,789,147 31,789,147 2,543,132 Residential Mortgages/RRE Financing 37,196,895 37,196,895 13,956,194 13,956,194 1,116,496 Qualifying Revolving Retail 8,554,803 8,554,803 6,521,864 6,521,864 521,749 Hire Purchase 10,588,517 10,588,517 7,345,906 7,345,906 587,672 Other Retail 4,760,829 4,760,829 2,679,719 2,679,719 214,377 Securitisation – – – – –

Total for IRB Approach 140,539,303 140,539,303 67,724,963 67,724,963 5,417,997

Total Credit Risk (Exempted Exposures and Exposures under the IRB Approach After Scaling Factor) 242,766,289 237,280,560 109,351,226 109,351,226 8,748,098

Large Exposure Risk Requirement 400,148 400,148 400,148 400,148 32,012

Market Risk (SA) Interest Rate Risk/Benchmark Rate Risk 6,676,742 6,676,742 534,139 Foreign Currency Risk 873,080 873,080 69,846 Equity Risk 737,166 737,166 58,973 Commodity Risk 21,147 21,147 1,692 Options Risk 476,996 476,996 38,160

Total Market Risk 8,785,131 8,785,131 702,810

Operational Risk (BIA) 12,620,584 12,620,584 1,009,647

Total RwA and Capital Requirement 131,157,089 131,157,089 10,492,567

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 2(a): Disclosure on Total RWA and Minimum Capital Requirement for CIMBBG (Continued)

2010 CIMBBG

(RM’000)Exposure Class

Net Exposurebefore CRM

(SA)/EAD(IRB)

Net Exposureafter CRM

(SA)/EAD(IRB) RwA

Total RwA after effects

of PSIA

Minimum capital

requirementat 8%

Credit RiskExposures under the SA Sovereign/Central Banks 34,191,143 34,191,143 111,141 111,141 8,891 Public Sector Entities 859,623 286,195 115,587 115,587 9,247 Banks, DFIs & MDBs 999,268 623,742 136,849 136,849 10,948 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 6,114 6,114 3,057 3,057 245 Corporate 13,304,856 12,470,392 12,073,217 12,073,217 965,857 Regulatory Retail 21,886,888 17,389,403 12,782,127 12,782,127 1,022,570 Residential Mortgages/RRE Financing 3,526,034 3,525,782 1,303,868 1,303,868 104,309 Higher Risk Assets 1,086,689 1,086,689 1,630,033 1,630,033 130,403 Other Assets 8,114,421 8,114,421 4,189,386 4,189,386 335,151 Securitisation 806,137 806,137 168,458 168,458 13,477

Total for SA 84,781,173 78,500,018 32,513,723 32,513,723 2,601,098

Exposures under the IRB Approach Sovereign/Central Banks – – – – – Public Sector Entities – – – – – Banks, DFIs & MDBs 20,317,706 20,317,706 4,671,019 4,671,019 373,682 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – – Corporate 56,748,623 56,748,623 33,657,571 33,657,571 2,692,606 Residential Mortgages/RRE Financing 32,061,235 32,061,235 12,107,801 12,107,801 968,624 Qualifying Revolving Retail 8,209,166 8,209,166 6,996,074 6,996,074 559,686 Hire Purchase 10,795,475 10,795,475 8,779,537 8,779,537 702,363 Other Retail 5,229,649 5,229,649 2,070,020 2,070,020 165,602 Securitisation – – – – –

Total for IRB Approach 133,361,854 133,361,854 68,282,021 68,282,021 5,462,562

Total Credit Risk (Exempted Exposures and Exposures under the IRB Approach After Scaling Factor) 218,143,027 211,861,872 104,892,665 104,892,665 8,391,413

Large Exposure Risk Requirement 360,424 360,424 360,424 360,424 28,834

Market Risk (SA) Interest Rate Risk/Benchmark Rate Risk 7,175,760 7,175,760 574,061 Foreign Currency Risk 668,093 668,093 53,447 Equity Risk 655,057 655,057 52,405 Commodity Risk – – – Options Risk 1,159,398 1,159,398 92,752

Total Market Risk 9,658,308 9,658,308 772,665

Operational Risk (BIA) 11,242,737 11,242,737 899,419

Total RwA and Capital Requirement 126,154,134 126,154,134 10,092,331

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 2(b): Disclosure on Total RWA and Minimum Capital Requirement for CIMB Islamic

2011 CIMB Islamic

(RM’000)Exposure Class

Net Exposurebefore CRM

(SA)/EAD(IRB)

Net Exposureafter CRM

(SA)/EAD(IRB) RwA

Total RwA after effects

of PSIA

Minimum capital

requirementat 8%

Credit RiskExposures under the SA Sovereign/Central Banks 15,289,967 15,289,967 6,739 6,739 539 Public Sector Entities – – – – – Banks, DFIs & MDBs 32,040 32,040 6,408 6,408 513 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – – Corporate 330,015 329,383 328,608 328,608 26,289 Regulatory Retail 4,154,581 4,140,223 3,238,847 3,238,847 259,108 RRE Financing – – – – – Higher Risk Assets 575 575 863 863 69 Other Assets 96,151 96,151 96,151 96,151 7,692 Securitisation 35,857 35,857 7,171 7,171 574

Total for SA 19,939,185 19,924,196 3,684,786 3,684,786 294,783

Exposures under the IRB Approach Sovereign/Central Banks – – – – – Public Sector Entities – – – – – Banks, DFIs & MDBs 2,047,323 2,047,323 427,565 427,565 34,205 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – – Corporate 6,157,684 6,157,684 3,923,587 3,372,557 269,805 RRE Financing 6,486,660 6,486,660 2,262,946 2,262,946 181,036 Qualifying Revolving Retail 171,747 171,747 164,232 164,232 13,139 Hire Purchase 5,286,837 5,286,837 3,465,614 3,465,614 277,249 Other Retail 1,151,298 1,151,298 677,643 677,643 54,211 Securitisation – – – – –

Total for IRB Approach 21,301,549 21,301,549 10,921,587 10,370,558 829,645

Total Credit Risk (Exempted Exposures and Exposures under the IRB Approach After Scaling Factor) 41,240,734 41,225,745 15,261,669 14,677,578 1,174,206

Large Exposure Risk Requirement – – – – –

Market Risk (SA) Benchmark Rate Risk 304,847 304,847 24,388 Foreign Currency Risk 41,826 41,826 3,346 Equity Risk – – – Commodity Risk – – – Options Risk – – –

Total Market Risk 346,673 346,673 27,734

Operational Risk (BIA) 1,402,324 1,402,324 112,186

Total RwA and Capital Requirement 17,010,666 16,426,575 1,314,126

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 2(b): Disclosure on Total RWA and Minimum Capital Requirement for CIMB Islamic (Continued)

2010 CIMB Islamic

(RM’000)Exposure Class

Net Exposurebefore CRM

(SA)/EAD(IRB)

Net Exposureafter CRM

(SA)/EAD(IRB) RwA

Total RwA after effects

of PSIA

Minimum capital

requirementat 8%

Credit RiskExposures under the SA Sovereign/Central Banks 11,834,620 11,834,620 – – – Public Sector Entities – – – – – Banks, DFIs & MDBs – – – – – Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – – Corporate 1,245,200 1,221,525 1,135,607 106,689 8,535 Regulatory Retail 2,605,475 2,062,618 1,457,895 1,449,581 115,966 RRE Financing – – – – – Higher Risk Assets – – – – – Other Assets 379,522 379,522 335,525 335,525 26,842 Securitisation 35,583 35,583 7,117 7,117 569

Total for SA 16,100,400 15,533,868 2,936,143 1,898,911 151,913

Exposures under the IRB Approach Sovereign/Central Banks – – – – – Public Sector Entities – – – – – Banks, DFIs & MDBs 2,117,034 2,117,034 479,219 479,219 38,338 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – – Corporate 4,865,731 4,865,731 3,030,466 2,098,019 167,842 RRE Financing 4,900,357 4,900,357 2,043,212 2,043,212 163,457 Qualifying Revolving Retail 168,080 168,080 175,122 175,122 14,010 Hire Purchase 5,082,644 5,082,644 3,954,236 – – Other Retail 1,124,378 1,124,378 605,132 605,132 48,411 Securitisation – – – – –

Total for IRB Approach 18,258,225 18,258,225 10,287,386 5,400,704 432,056

Total Credit Risk (Exempted Exposures and Exposures under the IRB Approach After Scaling Factor) 34,358,625 33,792,093 13,840,772 7,623,657 609,893

Large Exposure Risk Requirement – – – – –

Market Risk (SA) Benchmark Rate Risk 255,237 255,237 20,419 Foreign Currency Risk 29,879 29,879 2,390 Equity Risk – – – Commodity Risk – – – Options Risk – – –

Total Market Risk 285,115 285,115 22,809

Operational Risk (BIA) 1,041,278 1,041,278 83,302

Total RwA and Capital Requirement 15,167,165 8,950,050 716,004

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 2(c): Disclosure on Total RWA and Minimum Capital Requirement for CIMBIBG

2011 CIMBIBG

(RM’000)Exposure Class

Net Exposurebefore CRM

(SA)

Net Exposureafter CRM

(SA) RwA

Total RwA after effects

of PSIA

Minimum capital

requirementat 8%

Credit Risk (SA) Sovereign/Central Banks 274,850 274,850 – – – Public Sector Entities – – – – – Banks, DFIs & MDBs 2,148,870 2,148,870 603,879 603,879 48,310 Insurance Cos, Securities Firms & Fund Managers – – – – – Corporate 51,015 51,015 51,015 51,015 4,081 Regulatory Retail 3,306 3,306 2,576 2,576 206 Residential Mortgages 23,517 23,517 9,040 9,040 723 Higher Risk Assets 2,200 2,200 3,300 3,300 264 Other Assets 412,206 412,206 412,156 412,156 32,972 Securitisation – – – – –

Total Credit Risk 2,915,963 2,915,963 1,081,967 1,081,967 86,557

Large Exposure Risk Requirement – – – – –

Market Risk (SA) Interest Rate Risk 142,170 142,170 11,374 Foreign Currency Risk 52,427 52,427 4,194 Equity Risk 124 124 10 Commodity Risk – – – Options Risk 112,594 112,594 9,008

Total Market Risk 307,315 307,315 24,585

Operational Risk (BIA) 807,424 807,424 64,594

Total RwA and Capital Requirement 2,196,706 2,196,706 175,736

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (Continued)

Table 2(c): Disclosure on Total RWA and Minimum Capital Requirement for CIMBIBG (Continued)

2010 CIMBIBG

(RM’000)Exposure Class

Net Exposurebefore CRM

(SA)

Net Exposureafter CRM

(SA) RwA

Total RwA after effects

of PSIA

Minimum capital

requirementat 8%

Credit Risk (SA) Sovereign/Central Banks 301,070 301,070 – – – Public Sector Entities – – – – – Banks, DFIs & MDBs 2,498,887 2,498,887 523,579 523,579 41,886 Insurance Cos, Securities Firms & Fund Managers – – – – – Corporate 32,802 32,802 16,401 16,401 1,312 Regulatory Retail 13,047 13,047 10,346 10,346 828 Residential Mortgages 30,961 30,961 11,746 11,746 940 Higher Risk Assets 6,331 6,331 9,496 9,496 760 Other Assets 877,242 877,242 523,468 523,468 41,877 Securitisation – – – – –

Total Credit Risk 3,760,340 3,760,340 1,095,035 1,095,035 87,603

Large Exposure Risk Requirement – – – – –

Market Risk (SA) Interest Rate Risk 154,567 154,567 12,365 Foreign Currency Risk 31,461 31,461 2,517 Equity Risk 6,294 6,294 503 Commodity Risk – – – Options Risk – – –

Total Market Risk 192,321 192,321 15,386

Operational Risk (BIA) 765,308 765,308 61,225

Total RwA and Capital Requirement 2,052,664 2,052,664 164,213

Internal Capital Adequacy Assessment Process (ICAAP)The economic capital framework together with the regulatory capital framework are the main considerations in CIMB Group’s ICAAP Framework.

CIMB Group has implemented its internal economic capital framework since 2001, whereby capital is allocated to all business units for its risk-taking purposes. The economic capital framework is being refined to include other risks in line with the requirements of BNM’s RWCAF – ICAAP (Pillar 2) and CAFIB – ICAAP (Pillar 2).

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CAPITAL MANAGEMENT (CONTINUED)

Internal Capital Adequacy Assessment Process (ICAAP) (Continued)CIMB Group’s ICAAP Framework comprises 5 main elements, namely:

• Governance by the Board and Senior Management: The Board and Senior Management are responsible to ensure that capital levels in the Group are proportionate to the level and complexity of the inherent material risks in the Group.

• Comprehensive Risk Assessment: Comprehensive risk assessment involves considering the potential financial or reputational impact of material risks on the Group. Material risks can be measureable or non-measurable and are identified, evaluated, measured, mitigated and monitored/reported on a regular basis according to the Group’s risk management process.

• Economic Capital Computation and Allocation: Each year, capital will be allocated to each business unit based on the respective business plan, budgeted profit and targeted RAROC.

• Sound Capital Management: The internal capital targets for the Group are recommended and set by the Group EXCO and approved by the relevant Board of Directors on an annual basis. CIMB Group Holdings Berhad is required to maintain a target Double Leverage Ratio which is approved by the Group EXCO and the Board of CIMB Group Holdings Berhad.

• Capital Adequacy Assessment: In assessing its regulatory and economic capital adequacy, the Group adopts several methodologies, including stress test which are integrated into the Group’s risk management process. Each methodology used to assess and quantify material risks are validated by an independent team and periodically reviewed by Group Internal Audit. Capital utilisation and the Group’s overall regulatory and economic capital positions are monitored and reported to the GRC and BRC on a monthly basis.

CREDIT RISk

Credit risk, is defined as arising from losses due to the obligor, market counterparty or issuer of securities or other instruments held, failing to perform its contractual obligations to the Group. It arises primarily from lending/financing activities through loans/financing assets as well as commitments to support clients’ obligations to third parties, i.e. guarantees. In sales and trading activities, credit risk arises from the possibility that the Group’s counterparties will not be able or willing to fulfil their obligation on transactions on or before settlement date. In derivative activities, credit risk arises when counterparties to derivative contracts, such as interest/profit rate swaps, are not able to or willing to fulfil their obligation to pay the positive fair value or receivable resulting from the execution of contract terms. Credit risk may also arise where the downgrading of an entity’s rating causes the fair value of the Group’s investment in that entity’s financial instruments to fall.

Credit Risk ManagementThe purpose of credit risk management is to keep credit risk exposure to an acceptable level vis-à-vis the capital, and to ensure the returns commensurate with risks.

The credit approving authority is established and documented in the Group’s credit policy. The Group adopts a multi-tiered credit approving authority spanning various delegated authorities and various credit committees. The credit committees namely, SBCC, CBCC, RCC and GWBRC are set up to enhance the efficiency and effectiveness of the credit oversight as well as the credit approval process for all credit applications originating from the Group’s business units. The Committees also ensure the overall loan/financing portfolio meets the guidelines of the regulatory authorities and adherence to the approved credit policies and procedures.

All credit applications are independently evaluated by GC/RCM prior to submission to the relevant committees for approval. Adherence to and compliance with single customer, country and global counterparty limits as well as the assessment of the quality of collateral are approaches adopted to address concentration risk to any large sector/industry, or to a particular counterparty group or individual.

Adherence to established credit limits is monitored daily by GRM, which combines all exposures for each counterparty or group, including off balance sheet items and potential exposures. Limits are also monitored based on rating classification of the obligor and/or counterparty.

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CREDIT RISk (CONTINUED)

Credit Risk Management (Continued)It is a policy of the Group that all exposures must be rated or scored based on the appropriate internal rating models, where available. Retail exposures are managed on a portfolio basis and the risk rating models are designed to assess the credit worthiness and the likelihood of the obligors to repay their debts, performed by way of statistical analysis from credit bureau and demographic information of the obligors. The risk rating models for non-retail exposures are designed to assess the credit worthiness of the corporations or entities in paying their obligations, derived from risk factors such as financial history and demographics or company profile. These rating models are developed and implemented to standardise and enhance the credit underwriting and decision-making process for the Group’s retail and non-retail exposures.

Credit reviews and rating are conducted on the credit exposures on an annual basis and more frequent when material information on the obligor or other external factors come to light.

The exposures are actively monitored, reviewed on a regular basis and reported monthly to GRC and BRC so that deteriorating exposures are identified, analysed and discussed with the relevant business units for appropriate remedial actions including recovery actions, if required.

In addition to the above, the Group also employs CaR to measure and manage credit portfolio risk due to credit events. The Group adopted the Monte Carlo simulation approach in the generation of possible portfolio scenarios to obtain the standalone and portfolio CaR. This approach takes into account the credit concentration risk and the correlation between obligors/counterparties and industries. In estimating the portfolio CaR, the Group uses 25,000 simulation numbers at 99% confidence level. The generated portfolio CaR and any shortfall in the provision for defaulted accounts make up to the total Credit CaR utilisation to be compared against the allocated capital. The CaR usage versus pre-determined limit is monitored by RMA within GRM. Any exception will be highlighted to Management in accordance with the Group’s exception management procedures. These are summarised and reported to GRC and BRC on a monthly basis.

Summary Of Credit ExposuresGross Credit Exposures by Geographic DistributionThe following tables represent the Group’s credit exposures by geographic region. The geographic distribution is based on the country in which the portfolio is geographically managed.

Table 3(a): Geographic distribution of credit exposures for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class Malaysia Singapore Thailand

Other Countries Total

Sovereign 43,278,526 1,268,202 2,655,858 31,627 47,234,212Bank 16,551,050 1,658,808 866,649 1,539,135 20,615,642Corporate 55,994,262 8,137,703 9,464,366 1,079,359 74,675,689Mortgage/RRE Financing 37,497,187 2,841,308 1,894,764 – 42,233,259HPE 10,588,517 – – – 10,588,517QRRE 8,554,803 – – – 8,554,803Other Retail 25,789,050 2,350,339 2,917,719 18,831 31,075,939Other Exposures 5,868,755 193,452 1,574,415 151,603 7,788,226

Total Gross Credit Exposure 204,122,151 16,449,812 19,373,771 2,820,555 242,766,289

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross Credit Exposures by Geographic Distribution (Continued)Table 3(a): Geographic distribution of credit exposures for CIMBBG (Continued)

2010 CIMBBG

(RM’000)Exposure Class Malaysia Singapore Thailand

Other Countries Total

Sovereign 30,086,881 367,606 3,725,246 11,409 34,191,143Bank 15,661,854 2,804,778 1,753,298 1,962,781 22,182,712Corporate 55,310,068 5,965,868 7,756,705 1,020,838 70,053,479Mortgage/RRE Financing 32,416,077 1,525,244 1,645,947 – 35,587,269HPE 10,795,475 – – – 10,795,475QRRE 8,209,166 – – – 8,209,166Other Retail 22,741,548 1,364,034 2,899,523 111,432 27,116,537Other Exposures 8,212,454 155,696 1,566,040 73,056 10,007,246

Total Gross Credit Exposure 183,433,523 12,183,228 19,346,759 3,179,517 218,143,027

Table 3(b): Geographic Distribution of Credit Exposures for CIMB Islamic

2011 CIMB Islamic

(RM’000)Exposure Class Malaysia Singapore Thailand

Other Countries Total

Sovereign 15,289,967 – – – 15,289,967Bank 2,079,363 – – – 2,079,363Corporate 6,487,699 – – – 6,487,699RRE Financing 6,486,660 – – – 6,486,660HPE 5,286,837 – – – 5,286,837QRRE 171,747 – – – 171,747Other Retail 5,305,878 – – – 5,305,878Other Exposures 132,582 – – – 132,582

Total Gross Credit Exposure 41,240,734 – – – 41,240,734

2010 CIMB Islamic

(RM’000)Exposure Class Malaysia Singapore Thailand

Other Countries Total

Sovereign 11,834,620 – – – 11,834,620Bank 2,117,034 – – – 2,117,034Corporate 6,110,931 – – – 6,110,931RRE Financing 4,900,357 – – – 4,900,357HPE 5,082,644 – – – 5,082,644QRRE 168,080 – – – 168,080Other Retail 3,729,853 – – – 3,729,853Other Exposures 415,105 – – – 415,105

Total Gross Credit Exposure 34,358,625 – – – 34,358,625

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross Credit Exposures by Geographic Distribution (Continued)Table 3(c): Geographic Distribution of Credit Exposures for CIMBIBG

2011 CIMBIBG

(RM’000)Exposure Class Malaysia Singapore Thailand

Other Countries Total

Sovereign 274,850 – – – 274,850Bank 2,148,870 – – – 2,148,870Corporate 51,015 – – – 51,015Mortgage 23,517 – – – 23,517HPE – – – – –QRRE – – – – –Other Retail 3,306 – – – 3,306Other Exposures 414,406 – – – 414,406

Total Gross Credit Exposure 2,915,963 – – – 2,915,963

2010 CIMBIBG

(RM’000)Exposure Class Malaysia Singapore Thailand

Other Countries Total

Sovereign 301,070 – – – 301,070Bank 2,498,887 – – – 2,498,887Corporate 32,802 – – – 32,802Mortgage 30,961 – – – 30,961HPE – – – – –QRRE – – – – –Other Retail 13,047 – – – 13,047Other Exposures 883,572 – – – 883,572

Total Gross Credit Exposure 3,760,340 – – – 3,760,340

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross credit exposures by sectorThe following tables represent the Group’s credit exposure analysed by sector.

Table 4(a): Distribution of Credit Exposures by Sector for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class

Primary Agriculture

Mining and quarrying

Manu-facturing

Electricity, Gas and

water Supply Construction

wholesale and Retail

Trade, and Restaurants and Hotels

Transport, Storage and

Commu-nication

Finance, Insurance/

Takaful, Real Estate

and Business Activities

Education, Health and

Others Others* Total

Sovereign – – – 755,901 – – 637,735 28,852,317 16,988,259 – 47,234,212Bank – – – – – – – 20,587,248 28,394 – 20,615,642Corporate 2,703,194 1,335,532 11,223,417 3,227,428 5,796,583 8,471,304 12,295,142 20,799,321 4,757,302 4,066,466 74,675,689Mortgage/ RRE Financing – – – – – – – – – 42,233,259 42,233,259HPE – – – – – – – – – 10,588,517 10,588,517QRRE – – – – – – – – – 8,554,803 8,554,803Other Retail 281,461 12,441 588,019 9,191 363,108 1,132,994 110,253 2,057,588 1,829,572 24,691,311 31,075,939Other Exposures – – – 1,502 – 1,315 – 5,264,675 137,918 2,382,816 7,788,226

Total Gross Credit Exposure 2,984,655 1,347,973 11,811,436 3,994,023 6,159,690 9,605,613 13,043,130 77,561,148 23,741,446 92,517,174 242,766,289

* Others include Retail exposures and exposures which are not elsewhere classified.

2010 CIMBBG

(RM’000)Exposure Class

Primary Agriculture

Mining and quarrying

Manu-facturing

Electricity, Gas and

water Supply Construction

wholesale and Retail

Trade, and Restaurants and Hotels

Transport, Storage and

Commu-nication

Finance, Insurance/

Takaful, Real Estate

and Business Activities

Education, Health and

Others Others* Total

Sovereign – – – – – – 486,261 17,825,252 15,879,629 – 34,191,143Bank – – – – – – 25,118 22,004,630 152,964 – 22,182,712Corporate 2,827,213 748,946 11,254,654 4,052,226 6,873,427 8,898,965 9,758,088 16,606,766 2,763,100 6,270,095 70,053,479Mortgage/ RRE Financing – – – – – – – – – 35,587,269 35,587,269HPE – – – – – – – – – 10,795,475 10,795,475QRRE – – – – – – – – – 8,209,166 8,209,166Other Retail 76,121 9,647 485,846 13,447 370,441 1,197,291 128,996 1,455,408 2,217,982 21,161,359 27,116,537Other Exposures – – 2,406 1,532 – 1,423 – 7,563,771 1,382,316 1,055,799 10,007,246

Total Gross Credit Exposure 2,903,334 758,592 11,742,906 4,067,204 7,243,868 10,097,678 10,398,463 65,455,827 22,395,991 83,079,163 218,143,027

* Others include Retail exposures and exposures which are not elsewhere classified.

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross credit exposures by sector (Continued)The following tables represent the Group’s credit exposure analysed by sector (Continued).

Table 4(b): Distribution of Credit Exposures by Sector for CIMB Islamic

2011 CIMB Islamic

(RM’000)Exposure Class

Primary Agriculture

Mining and quarrying

Manu-facturing

Electricity, Gas and

water Supply Construction

ShariahCompliantwholesale and Retail

Trade, and Restaurants and Hotels

Transport, Storage and

Commu-nication

Finance, Insurance/

Takaful, Real Estate

and Business Activities

Education, Health and

Others Others* Total

Sovereign – – – – – – 218,459 12,544,005 2,491,996 35,507 15,289,967Bank – – – – – – – 2,079,363 – – 2,079,363Corporate 549,963 24,962 651,583 84,816 371,898 391,452 1,280,544 2,348,801 515,369 268,311 6,487,699RRE Financing – – – – – – – – – 6,486,660 6,486,660HPE – – – – – – – – – 5,286,837 5,286,837QRRE – – – – – – – – – 171,747 171,747Other Retail 1,560 589 4,874 120 14,369 24,798 1,191 20,533 14,773 5,223,071 5,305,878Other Exposures – – – – – – – 35,857 – 96,726 132,582

Total Gross Credit Exposure 551,523 25,551 656,457 84,936 386,267 416,249 1,500,193 17,028,559 3,022,139 17,568,859 41,240,734

* Others include Retail exposures and exposures which are not elsewhere classified.

2010 CIMB Islamic

(RM’000)Exposure Class

Primary Agriculture

Mining and quarrying

Manu-facturing

Electricity, Gas and

water Supply Construction

ShariahCompliantwholesale and Retail

Trade, and Restaurants and Hotels

Transport, Storage and

Commu-nication

Finance, Insurance/

Takaful, Real Estate

and Business Activities

Education, Health and

Others Others* Total

Sovereign – – – – – – 115,428 7,012,920 4,706,271 – 11,834,620Bank – – – – – – – 2,117,034 – – 2,117,034Corporate 704,490 2,578 413,221 58,834 472,964 516,033 1,105,585 1,636,230 226,930 974,066 6,110,931RRE Financing – – – – – – – – – 4,900,357 4,900,357HPE – – – – – – – – – 5,082,644 5,082,644QRRE – – – – – – – – – 168,080 168,080Other Retail 7,125 – 11,036 19 15,949 24,238 2,604 23,709 21,842 3,623,331 3,729,853Other Exposures – – – – – – – 35,583 – 379,522 415,105

Total Gross Credit Exposure 711,615 2,578 424,256 58,853 488,913 540,271 1,223,618 10,825,475 4,955,044 15,128,001 34,358,625

* Others include Retail exposures and exposures which are not elsewhere classified.

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross credit exposures by sector (Continued)The following tables represent the Group’s credit exposure analysed by sector (Continued).

Table 4(c): Distribution of Credit Exposures by Sector for CIMBIBG

2011 CIMBIBG

(RM’000)Exposure Class

Primary Agriculture

Mining and quarrying

Manu-facturing

Electricity, Gas and

water Supply Construction

wholesale and Retail

Trade, and Restaurants and Hotels

Transport, Storage and

Commu-nication

Finance, Insurance,

Real Estate and

Business Activities

Education, Health and

Others Others* Total

Sovereign – – – – – – – 274,850 – – 274,850Bank – – – – – – – 2,148,870 – – 2,148,870Corporate – – – – 112 – – 6,595 – 44,308 51,015Mortgage – – – – – – – – – 23,517 23,517HPE – – – – – – – – – – –QRRE – – – – – – – – – – –Other Retail – – – – – – – – – 3,306 3,306Other Exposures – – – – – – – – – 414,406 414,406

Total Gross Credit Exposure – – – – 112 – – 2,430,315 – 485,537 2,915,963

* Others include Retail exposures and exposures which are not elsewhere classified.

2010 CIMBIBG

(RM’000)Exposure Class

Primary Agriculture

Mining and quarrying

Manu-facturing

Electricity, Gas and

water Supply Construction

wholesale and Retail

Trade, and Restaurants and Hotels

Transport, Storage and

Commu-nication

Finance, Insurance,

Real Estate and

Business Activities

Education, Health and

Others Others* Total

Sovereign – – – – – – – 301,070 – – 301,070Bank – – – – – – – 2,498,887 – – 2,498,887Corporate – – – – – – – – – 32,802 32,802Mortgage – – – – – – – – – 30,961 30,961HPE – – – – – – – – – – –QRRE – – – – – – – – – – –Other Retail – – – – – – – – – 13,047 13,047Other Exposures – – – – – – – – – 883,572 883,572

Total Gross Credit Exposure – – – – – – – 2,799,958 – 960,383 3,760,340

* Others include Retail exposures and exposures which are not elsewhere classified.

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross credit exposures by residual contractual maturity

Table 5(a): Distribution of Credit Exposures by Residual Contractual Maturity for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class

Less than1 year 1 to 5 years

More than5 years Total

Sovereign 21,313,336 10,351,847 15,569,029 47,234,212Bank 11,805,820 6,028,657 2,781,165 20,615,642Corporate 29,302,073 24,473,737 20,899,879 74,675,689Mortgage/RRE Financing 27,862 2,338,601 39,866,797 42,233,259HPE 146,774 3,462,190 6,979,554 10,588,517QRRE 8,554,803 – – 8,554,803Other Retail 2,732,124 4,643,028 23,700,787 31,075,939Other Exposures 487,703 372,714 6,927,808 7,788,226

Total Gross Credit Exposure 74,370,496 51,670,774 116,725,020 242,766,289

2010 CIMBBG

(RM’000)Exposure Class

Less than1 year 1 to 5 years

More than5 years Total

Sovereign 18,132,900 7,480,374 8,577,869 34,191,143Bank 14,999,702 4,919,841 2,263,169 22,182,712Corporate 29,421,940 25,082,672 15,548,867 70,053,479Mortgage/RRE Financing 26,141 459,416 35,101,712 35,587,269HPE 198,101 3,758,867 6,838,507 10,795,475QRRE 8,209,166 – – 8,209,166Other Retail 4,306,388 2,353,760 20,456,389 27,116,537Other Exposures 27,714 616,691 9,362,841 10,007,246

Total Gross Credit Exposure 75,322,052 44,671,620 98,149,354 218,143,027

Table 5(b): Distribution of Credit Exposures by Residual Contractual Maturity for CIMB Islamic

2011 CIMB Islamic

(RM’000)Exposure Class

Less than1 year 1 to 5 years

More than5 years Total

Sovereign 7,013,663 457,847 7,818,457 15,289,967Bank 1,708,188 72,214 298,962 2,079,363Corporate 1,431,150 1,911,389 3,145,160 6,487,699RRE Financing 738 32,768 6,453,155 6,486,660HPE 35,203 1,091,726 4,159,907 5,286,837QRRE 171,747 – – 171,747Other Retail 34,835 535,132 4,735,911 5,305,878Other Exposures 15,064 – 117,518 132,582

Total Gross Credit Exposure 10,410,588 4,101,075 26,729,071 41,240,734

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CREDIT RISk (CONTINUED)

Summary Of Credit Exposures (Continued)Gross credit exposures by residual contractual maturity (Continued)

Table 5(b): Distribution of Credit Exposures by Residual Contractual Maturity for CIMB Islamic (Continued)

2010 CIMB Islamic

(RM’000)Exposure Class

Less than1 year 1 to 5 years

More than5 years Total

Sovereign 6,875,575 132,564 4,826,480 11,834,620Bank 1,767,897 6,800 342,337 2,117,034Corporate 2,526,764 1,316,884 2,267,283 6,110,931RRE Financing 663 25,252 4,874,443 4,900,357HPE 19,781 1,024,510 4,038,353 5,082,644QRRE 168,080 – – 168,080Other Retail 99,022 438,418 3,192,413 3,729,853Other Exposures – 15,098 400,007 415,105

Total Gross Credit Exposure 11,457,783 2,959,526 19,941,316 34,358,625

Table 5(c): Distribution of Credit Exposures Residual Contractual Maturity for CIMBIBG

2011 CIMBIBG

(RM’000)Exposure Class

Less than1 year 1 to 5 years

More than5 years Total

Sovereign 273,257 – 1,592 274,850Bank 2,131,909 15,358 1,604 2,148,870Corporate 21 3,669 47,325 51,015Mortgage 62 827 22,628 23,517HPE – – – –QRRE – – – –Other Retail 125 2,448 733 3,306Other Exposures 3,967 – 410,439 414,406

Total Gross Credit Exposure 2,409,341 22,301 484,321 2,915,963

2010 CIMBIBG

(RM’000)Exposure Class

Less than1 year 1 to 5 years

More than5 years Total

Sovereign 300,683 – 387 301,070Bank 2,319,652 79,323 99,912 2,498,887Corporate – – 32,802 32,802Mortgage – – 30,961 30,961HPE – – – –QRRE – – – –Other Retail – – 13,047 13,047Other Exposures 2,571 – 881,002 883,572

Total Gross Credit Exposure 2,622,906 79,323 1,058,111 3,760,340

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & FinancingPast Due But Not ImpairedA loan/financing is considered past due when any payment due under strict contractual terms is received late or missed. Late processing and other administrative delays on the side of the borrower/customer can lead to a financial asset being past due but not impaired. Therefore, loans/financings and advances less than 90 days past due are not usually considered impaired, unless other information is available to indicate the contrary. For the purposes of this analysis, an asset is considered past due and included below when any payment due under strict contractual terms is received late or missed. The amount included is the entire financial asset, not just the payment, of principal or interest/profit or both, overdue.

The following tables provide an analysis of the outstanding balances as at 31 December 2011 and 31 December 2010 which were past due but not impaired by sector and geographical respectively:

Table 6(a): Past Due but Not Impaired Loans, Advances and Financing by Sector

CIMBBG

(RM’000) 2011 2010

Primary Agriculture 13,729 39,516Mining and Quarrying 966 10,212Manufacturing 113,148 218,781Electricity, Gas and Water Supply 2,520 6,836Construction 102,526 250,855Wholesale and Retail Trade, and Restaurants and Hotels 177,959 261,001Transport, Storage and Communication 25,997 62,451Finance, Insurance/Takaful, Real Estate and Business Activities 138,321 158,754Education, Health and Others 695,359 298,193Others* 9,894,883 10,846,588

Total 11,165,408 12,153,187

CIMB Islamic

(RM’000) 2011 2010

Primary Agriculture 3,449 617Mining and Quarrying – 7,586Manufacturing 5,146 12,414Electricity, Gas and Water Supply 2 4,073Construction 4,496 39,330Wholesale and Retail Trade, and Restaurants and Hotels 10,313 20,705Transport, Storage and Communication 2,759 5,216Finance, Insurance/Takaful, Real Estate and Business Activities 12,064 46,364Education, Health and Others 654,235 236,278Others* 706,805 859,695

Total 1,399,269 1,232,278

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Past Due But Not Impaired (Continued)Table 6(a): Past Due but Not Impaired Loans, Advances and Financing by Sector (Continued)

CIMBIBG

(RM’000) 2011 2010

Primary Agriculture – –Mining and Quarrying – –Manufacturing – –Electricity, Gas and Water Supply – –Construction – –Wholesale and Retail Trade, and Restaurants and Hotels – –Transport, Storage and Communication – –Finance, Insurance, Real Estate and Business Activities – –Education, Health and Others – –Others* – –

Total – –

* Others include Retail exposures and exposures which are not elsewhere classified.

Table 6(b): Past Due but Not Impaired Loans, Advances and Financing by Geographic Distribution

CIMBBG

(RM’000) 2011 2010

Malaysia 10,517,404 11,583,194Singapore 3,633 14,770Thailand 644,371 422,646Other Countries – 132,577

Total 11,165,408 12,153,187

CIMB Islamic

(RM’000) 2011 2010

Malaysia 1,399,269 1,232,278Singapore – –Thailand – –Other Countries – –

Total 1,399,269 1,232,278

CIMBIBG

(RM’000) 2011 2010

Malaysia – –Singapore – –Thailand – –Other Countries – –

Total – –

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/FinancingsThe Group deems a financial asset or a group of financial asset to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Impairment losses are calculated on individual loans/financings and on loans/financings assessed collectively.

Losses for impaired loans/financings are recognised promptly when there is objective evidence that impairment of a portfolio of loans/financings has occurred. Evidence of impairment may include indications that the borrower/customer or a group of borrowers/customers is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, default of delinquency in interest/profit or principal payments and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The Group assesses individually whether objective evidence of impairment exists for all assets deemed to be individually significant. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced through the individual impairment allowance account and the amount of the loss is recognised in the statements of comprehensive income. Interest/profit income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest/profit used to discount the future cash flows for the purpose of measuring the impairment loss. The interest/profit income is recorded as part of interest/profit income.

Loans/Financings that have not been individually assessed are grouped together for portfolio impairment assessment. These loans/financings are grouped according to their credit risk characteristics for the purposes of calculating an estimated collective loss. Future cash flows on a group of financial assets that are collectively assessed for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group.

The following tables provide an analysis of the outstanding balances as at 31 December 2011 and 31 December 2010 which were impaired by sector and geographical respectively.

Table 7(a): Impaired Loans, Advances and Financing by Sector

CIMBBG

(RM’000) 2011 2010

Primary Agriculture 33,710 26,218Mining and Quarrying 33,287 9,865Manufacturing 685,505 823,497Electricity, Gas and Water Supply 108 348,685Construction 515,380 522,458Wholesale and Retail Trade, and Restaurants and Hotels 524,677 514,583Transport, Storage and Communication 923,484 892,463Finance, Insurance/Takaful, Real Estate and Business Activities 330,642 302,086Education, Health and Others 83,265 77,371Others* 1,968,822 1,511,615

Total 5,098,880 5,028,840

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 7(a): Impaired Loans, Advances and Financing by Sector (Continued)

CIMB Islamic

(RM’000) 2011 2010

Primary Agriculture 7,157 3,046Mining and Quarrying – –Manufacturing 12,319 6,688Electricity, Gas and Water Supply – –Construction 86,545 82,790Wholesale and Retail Trade, and Restaurants and Hotels 14,267 15,349Transport, Storage and Communication 104,173 87,976Finance, Insurance/Takaful, Real Estate and Business Activities 10,113 23,015Education, Health and Others 32,751 18,766Others* 78,453 98,249

Total 345,778 335,879

CIMBIBG

(RM’000) 2011 2010

Primary Agriculture – –Mining and Quarrying – –Manufacturing – –Electricity, Gas and Water Supply – –Construction – –Wholesale and Retail Trade, and Restaurants and Hotels – –Transport, Storage and Communication – –Finance, Insurance, Real Estate and Business Activities – –Education, Health and Others – –Others* 891 822

Total 891 822

* Others include Retail exposures and exposures which are not elsewhere classified.

Table 7(b): Impaired Loans, Advances and Financing by Geographic Distribution

CIMBBG

(RM’000) 2011 2010

Malaysia 4,476,849 4,467,087Singapore 42,661 59,066Thailand 579,370 502,687Other Countries – –

Total 5,098,880 5,028,840

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 7(b): Impaired Loans, Advances and Financing by Geographic Distribution (Continued)

CIMB Islamic

(RM’000) 2011 2010

Malaysia 345,778 335,879Singapore – –Thailand – –Other Countries – –

Total 345,778 335,879

CIMBIBG

(RM’000) 2011 2010

Malaysia 891 822Singapore – –Thailand – –Other Countries – –

Total 891 822

Table 8(a): Individual Impairment and Portfolio Impairment Allowances by Sector for CIMBBG

CIMBBG

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Primary Agriculture 14,548 24,919 10,946 27,375Mining and Quarrying 29,158 4,035 5,538 3,949Manufacturing 591,086 124,801 577,800 163,749Electricity, Gas and Water Supply 4,420 8,940 27,174 6,399Construction 265,531 86,977 253,413 98,328Wholesale and Retail Trade, and Restaurants and Hotels 311,705 190,247 239,760 212,500Transport, Storage and Communication 589,794 48,572 566,928 45,066Finance, Insurance/Takaful, Real Estate and Business Activities 158,462 100,689 223,450 123,722Education, Health and Others 22,889 29,142 25,066 27,256Others* 73,302 1,579,577 28,498 1,574,272

Total 2,060,895 2,197,899 1,958,573 2,282,616

* Others include Retail exposures and exposures which are not elsewhere classified.

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 8(b): Individual Impairment and Portfolio Impairment Allowances by Sector for CIMB Islamic

CIMB Islamic

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Primary Agriculture 4,503 8,277 1,859 1,904Mining and Quarrying – 192 – 3Manufacturing 5,492 8,079 4,549 4,958Electricity, Gas and Water Supply – 545 – –Construction 71,054 9,534 70,495 2,755Wholesale and Retail Trade, and Restaurants and Hotels 9,183 8,464 9,575 4,755Transport, Storage and Communication 2,031 4,419 – 1,034Finance, Insurance/Takaful, Real Estate and Business Activities 4,501 16,178 2,818 4,832Education, Health and Others 660 2,154 3,387 957Others* 5,832 359,902 – 219,292

Total 103,256 417,774 92,683 240,490

* Others include Retail exposures and exposures which are not elsewhere classified.

Table 8(c): Individual Impairment and Portfolio Impairment Allowances by Sector for CIMBIBG

CIMBIBG

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Primary Agriculture – – – –Mining and Quarrying – – – –Manufacturing – – – –Electricity, Gas and Water Supply – – – –Construction – – – –Wholesale and Retail Trade, and Restaurants and Hotels – – – –Transport, Storage and Communication – – – –Finance, Insurance, Real Estate and Business Activities – – – –Education, Health and Others – – – –Others* 891 623 822 650

Total 891 623 822 650

* Others include Retail exposures and exposures which are not elsewhere classified.

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 9(a): Individual Impairment and Portfolio Impairment Allowances by Geographic Distribution for CIMBBG

CIMBBG

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Malaysia 1,782,595 1,996,861 1,682,222 2,096,767Singapore 16,841 10,450 15,256 11,793Thailand 261,459 189,242 261,095 174,056Other Countries – 1,346 – –

Total 2,060,895 2,197,899 1,958,573 2,282,616

Table 9(b): Individual Impairment and Portfolio Impairment Allowances by Geographic Distribution for CIMB Islamic

CIMB Islamic

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Malaysia 103,256 417,744 92,683 240,490Singapore – – – –Thailand – – – –Other Countries – – – –

Total 103,256 417,744 92,683 240,490

Table 9(c): Individual Impairment and Portfolio Impairment Allowances by Geographic Distribution for CIMBIBG

CIMBIBG

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Malaysia 891 623 822 650Singapore – – – –Thailand – – – –Other Countries – – – –

Total 891 623 822 650

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CREDIT RISk (CONTINUED)

Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 10(a): Charges for Individual Impairment Provision and Write Offs During the Year for CIMBBG

CIMBBG

2011 2010

(RM’000)Charges/

write Back write-OffCharges/

write Back write-Off

Primary Agriculture 4,661 56 (58,186) 431Mining and Quarrying 22,907 – 33 –Manufacturing 45,035 17,918 (29,176) 140,301Electricity, Gas and Water Supply (5,111) – (6,256) 250,253Construction 25,143 7,230 34,897 22,360Wholesale and Retail Trade, and Restaurants and Hotels 9,791 2,789 38,956 66,794Transport, Storage and Communication 26,254 – 194,851 –Finance, Insurance/Takaful, Real Estate and Business Activities 19,887 612 (101,412) 167,058Education, Health and Others (118) – 2,233 –Others* 23,209 – (43,777) 4,567

Total 171,658 28,605 32,163 651,764

* Others include Retail exposures and exposures which are not elsewhere classified.

Table 10(b): Charges for Individual Impairment Provision and Write Offs During the Year for CIMB Islamic

CIMB Islamic

2011 2010

(RM’000)Charges/

write Back write-OffCharges/

write Back write-Off

Primary Agriculture 2,746 – 1,910 –Mining and Quarrying – – – –Manufacturing 5,993 4,342 (11,846) 7,200Electricity, Gas and Water Supply – – – –Construction 1,052 – 140 –Wholesale and Retail Trade, and Restaurants and Hotels 925 – 7,726 –Transport, Storage and Communication 2,100 – – –Finance, Insurance/Takaful, Real Estate and Business Activities (2,371) 99 1,247 3,073Education, Health and Others 180 – 391 –Others* 5,866 – 159 9

Total 16,491 4,441 (273) 10,282

* Others include Retail exposures and exposures which are not elsewhere classified.

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Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 10(c): Charges for Individual Impairment Provision and Write Offs During the Year for CIMBIBG

CIMBIBG

2011 2010

(RM’000)Charges/

write Back write-OffCharges/

write Back write-Off

Primary Agriculture – – – –Mining and Quarrying – – – –Manufacturing – – – –Electricity, Gas and Water Supply – – – –Construction – – – –Wholesale and Retail Trade, and Restaurants and Hotels – – – –Transport, Storage and Communication – – – –Finance, Insurance, Real Estate and Business Activities – – – –Education, Health and Others – – – –Others* 79 10 (55) –

Total 79 10 (55) –

* Others include Retail exposures and exposures which are not elsewhere classified.

Table 11(a): Analysis of movement for Loan/Financing Impairment Allowances for the Year Ended 31 December 2011 and 31 December 2010 for CIMBBG

CIMBBG

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Balance as at 1 January 1,958,573 2,282,616 3,356,101 2,222,029Allowance (written back)/made during the financial period/year 171,890 504,947 32,163 603,725Amount transferred to portfolio/individual impairment allowance (1,831) 1,831 (5,795) 5,795Amount written back in respect of recoveries (232) – – –Allowance made and charged to deferred assets 140 844 2,431 (3,352)Allowance made in relation to jointly controlled entity – – – –Amount written off (28,605) (566,248) (651,755) (464,059)Transfer(to)/from intercompany – – (357,590) (28,956)Disposal of subsidiary – – (324,226) (11,298)Unwinding income (44,973) (23,388) (63,538) (34,758)Exchange fluctuation 5,933 (2,703) (29,218) (6,510)

Total 2,060,895 2,197,899 1,958,573 2,282,616

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Credit quality Of Loans, Advances & Financing (Continued)Impaired Loans/Financings (Continued)Table 11(b): Analysis of movement for Loan/Financing Impairment Allowances for the Year Ended 31 December 2011 and 31 December 2010 for CIMB Islamic

CIMB Islamic

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Balance as at 1 January 92,683 240,490 105,851 260,926Allowance (written back)/made during the financial period/year 16,491 135,113 (273) 162,884Amount transferred to portfolio impairment allowance – – – –Amount written back in respect of recoveries – – – –Allowance made and charged to deferred assets – – – –Allowance made in relation to jointly controlled entity – – – –Amount written off (4,441) (119,912) (10,282) (61,502)Transfer (to)/from intercompany – 166,234 – (119,980)Disposal of subsidiary – – – –Unwinding income (1,477) (4,181) (2,613) (1,838)Exchange fluctuation – – – –

Total 103,256 417,744 92,683 240,490

Table 11(c): Analysis of movement for Loan/Financing Impairment Allowances for the Year Ended 31 December 2011 and 31 December 2010 for CIMBIBG

CIMBIBG

2011 2010

(RM’000)

Individual Impairment Allowance

Portfolio Impairment Allowance

Individual Impairment Allowance

Portfolio Impairment Allowance

Balance as at 1 January 822 650 877 679Allowance (written back)/made during the financial period/year 214 (27) 214 (29)Amount transferred to portfolio impairment allowance – – – –Amount written back in respect of recoveries (135) – (269) –Allowance made and charged to deferred assets – – – –Allowance made in relation to jointly controlled entity – – – –Amount written off (10) – – –Transfer (to)/from intercompany – – – –Disposal of subsidiary – – – –Unwinding income – – – –Exchange fluctuation – – – –

Total 891 623 822 650

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CREDIT RISk – DISCLOSURE FOR PORTFOLIOS UNDER THE STANDARDISED APPROACH (SA)

Credit exposures under SA are mainly exposures where the IRB Approach is not applicable or exposures that will eventually adopt the IRB Approach. Under SA, the regulator prescribes the risk weights for all asset types.

Exposures which are rated externally relate to sovereign and central banks while the unrated exposures relate to personal financing and other exposures. The Group applies external ratings for credit exposures under SA from S&P, Moody’s, Fitch, RAM, MARC and R&I. CIMB Group follows the process prescribed under BNM’s guidelines on RWCAF – Risk-Weighted Assets Computation and CAFIB to map the ratings to the relevant risk weights for computation of regulatory capital.

The following tables present the credit exposures by risk weights and after credit risk mitigation:

Table 12(a): Disclosure by Risk Weight under SA for CIMBBG

2011 CIMBBG

(RM’000)Risk weights

Sovereign/Central Banks PSEs

Banks, MDBs and

DFIs

Insurance Cos/

Takaful Operators, Securities

Firms & Fund

Managers CorporateRegulatory

Retail

Residential Mortgages/

RRE Financing

Higher Risk

AssetsOther

AssetsSecuriti-

sation*

Total Exposures

after Netting

and Credit Risk

Mitigation*

Total Risk weighted

Assets

0% 46,969,159 – – – – 17,702 – – 2,439,944 – 49,426,804 –20% 158,047 25,780 1,250,144 – 64,429 1,387 – – 418,779 713,799 2,632,365 526,47335% – – – – – – 4,813,516 – – – 4,813,516 1,684,73050% 1,360 320,860 49,775 81 40,257 1,223,512 77,131 – – – 1,712,976 856,48875% – – – – – 17,649,674 121,145 – – – 17,770,819 13,328,114100% 79,659 51,116 50,165 – 12,838,119 2,675,759 24,573 – 2,911,554 – 18,630,945 18,630,945150% 25,987 – – – 333,998 89,697 – 1,231,512 – – 1,681,195 2,521,792>150% – – – – – – – – – 2,525 2,525 14,222

Total 47,234,212 397,756 1,350,084 81 13,276,803 21,657,731 5,036,365 1,231,512 5,770,276 786,438 96,741,258 37,562,765

Average Risk Weight – 54% 24% 50% 101% 77% 37% 150% 52% 20% 39%

Deduction from Capital Base – – – – – – – – – 70,116 –

* The total includes the portion which is deducted from Capital Base, if any.

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CREDIT RISk – DISCLOSURE FOR PORTFOLIOS UNDER THE STANDARDISED APPROACH (SA) (CONTINUED)

Table 12(a): Disclosure by Risk Weight under SA for CIMBBG (Continued)

2010 CIMBBG

(RM’000)Risk weights

Sovereign/Central Banks PSEs

Banks, MDBs and

DFIs

Insurance Cos/

Takaful Operators, Securities

Firms & Fund

Managers CorporateRegulatory

Retail

Residential Mortgages/

RRE Financing

Higher Risk

AssetsOther

AssetsSecuriti-

sation*

Total Exposures

after Netting

and Credit Risk

Mitigation*

Total Risk weighted

Assets

0% 34,069,730 – 10,117 – 409,387 296,742 – – 2,505,188 – 37,291,164 –20% – 133,564 566,545 – 30,826 103,880 – – 1,774,808 733,496 3,343,117 668,62335% – – – – – – 3,301,384 – – – 3,301,384 1,155,48450% 20,544 127,514 47,081 6,114 226,430 389,671 89,496 – – – 906,850 453,42575% – – – – – 16,338,253 125,066 – – – 16,463,319 12,347,489100% 100,868 25,118 – – 11,503,573 156,925 9,836 – 3,834,425 – 15,630,745 15,630,745150% – – – – 300,176 103,934 – 1,086,689 – – 1,490,798 2,236,197>150% – – – – – – – – – 2,525 2,525 21,759

Total 34,191,143 286,195 623,742 6,114 12,470,392 17,389,403 3,525,782 1,086,689 8,114,421 806,137 78,500,018 32,513,723

Average Risk Weight – 40% 22% 50% 97% 74% 37% 150% 52% 21% 41%

Deduction from Capital Base – – – – – – – – – 70,116 –

* The total includes the portion which is deducted from Capital Base, if any.

Table 12(b): Disclosure by Risk Weight under SA for CIMB Islamic

2011 CIMB Islamic

(RM’000)Risk weights

Sovereign/Central Banks PSEs

Banks, MDBs and

DFIs

Insurance Cos/Takaful

Operators, Securities

Firms & Fund

Managers CorporateRegulatory

RetailRRE

Financing

Higher Risk

AssetsOther

AssetsSecuriti-

sation*

Total Exposures

after Netting

and Credit Risk

Mitigation*

Total Risk weighted

Assets

0% 15,256,271 – – – – – – – – – 15,256,271 –20% 33,697 – 32,040 – – – – – – 35,857 101,593 20,31935% – – – – – – – – – – –50% – – – – 21,460 1,177,082 – – – – 1,198,542 599,27175% – – – – – 1,251,746 – – – 1,251,746 938,809100% – – – – 288,014 1,711,193 – – 96,151 – 2,095,358 2,095,358150% – – – – 19,909 202 – 575 – – 20,686 31,029

Total 15,289,967 – 32,040 – 329,383 4,140,223 – 575 96,151 35,857 19,924,196 3,684,786

Average Risk Weight – – 20% – 100% 78% – 150% 100% 20% 18%

Deduction from Capital Base – – – – – – – – – – –

* The total includes the portion which is deducted from Capital Base, if any.

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Table 12(b): Disclosure by Risk Weight under SA for CIMB Islamic (Continued)

2010 CIMB Islamic

(RM’000)Risk weights

Sovereign/Central Banks PSEs

Banks, MDBs and

DFIs

Insurance Cos/Takaful

Operators, Securities

Firms & Fund

Managers CorporateRegulatory

RetailRRE

Financing

Higher Risk

AssetsOther

AssetsSecuriti-

sation*

Total Exposures

after Netting

and Credit Risk

Mitigation*

Total Risk weighted

Assets

0% 11,834,620 – – – – – – – – – 11,834,620 –20% – – – – – – – – 54,996 35,583 90,579 18,11635% – – – – – – – – – – – –50% – – – – 194,323 356,955 – – – – 551,278 275,63975% – – – – – 1,705,183 – – – – 1,705,183 1,278,888100% – – – – 1,004,717 380 – – 324,526 – 1,329,623 1,329,623150% – – – – 22,485 100 – – – – 22,585 33,878

Total 11,834,620 – – – 1,221,525 2,062,618 – – 379,522 35,583 15,533,868 2,936,143

Average Risk Weight – – – – 93% 71% – – 88% 20% 19%

Deduction from Capital Base – – – – – – – – – – –

* The total includes the portion which is deducted from Capital Base, if any.

Table 12(c): Disclosure by Risk Weight under SA for CIMBIBG

2011 CIMBIBG

(RM’000)Risk weights

Sovereign/Central Banks PSEs

Banks, MDBs and

DFIs

Insurance Cos,

Securities Firms &

Fund Managers Corporate

Regulatory Retail

Residential Mortgages

Higher Risk

AssetsOther

AssetsSecuriti-

sation*

Total Exposures

after Netting

and Credit Risk

Mitigation*

Total Risk weighted

Assets

0% 274,850 – – – – – – – 50 – 274,899 –20% – – 1,569,478 – – – – – – – 1,569,478 313,89635% – – – – – – 19,968 – – – 19,968 6,98950% – – 578,817 – – 20 2,440 – – – 581,276 290,63875% – – – – – 2,879 1,109 – – – 3,988 2,991100% – – 575 – 51,015 407 – – 412,156 – 464,153 464,153150% – – – – – – – 2,200 – – 2,200 3,300

Total 274,850 – 2,148,870 – 51,015 3,306 23,517 2,200 412,206 – 2,915,963 1,081,967

Average Risk Weight – – 28% – 100% 78% 38% 150% 100% – 37%

Deduction from Capital Base – – – – – – – – – – –

* The total includes the portion which is deducted from Capital Base, if any.

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CREDIT RISk – DISCLOSURE FOR PORTFOLIOS UNDER THE STANDARDISED APPROACH (SA) (CONTINUED)

Table 12(c): Disclosure by Risk Weight under SA for CIMBIBG (Continued)

2010 CIMBIBG

(RM’000)Risk weights

Sovereign/Central Banks PSEs

Banks, MDBs and

DFIs

Insurance Cos,

Securities Firms &

Fund Managers Corporate

Regulatory Retail

Residential Mortgages

Higher Risk

AssetsOther

AssetsSecuriti-

sation*

Total Exposures

after Netting

and Credit Risk

Mitigation*

Total Risk weighted

Assets

0% 301,070 – – – – – – – 33 – 301,103 –20% – – 2,419,558 – – – – – 442,176 – 2,861,734 572,34735% – – – – – – 24,898 – – – 24,898 8,71450% – – 79,323 – 32,802 – 6,063 – – – 118,188 59,09475% – – – – – 12,300 – – – – 12,300 9,225100% – – 6 – – – – – 435,032 – 435,038 435,038150% – – – – – 747 – 6,331 – – 7,078 10,616

Total 301,070 – 2,498,887 – 32,802 13,047 30,961 6,331 877,242 – 3,760,340 1,095,035

Average Risk Weight – – 21% – 50% 79% 38% 150% 60% – 29%

Deduction from Capital Base – – – – – – – – – – –

* The total includes the portion which is deducted from Capital Base, if any.

The following tables present the non-retail credit exposures before the effect of credit risk mitigation, according to ratings by ECAIs:

Table 13(a): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet ExposuresCredit Exposures (using Corporate Risk weights) Public Sector Entities 346,047 – 51,709 397,756 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 81 – – 81 Corporate 110,628 22,506 13,938,489 14,071,622Sovereign/Central Banks 2,999,959 93,275 44,140,978 47,234,212Banks, MDBs and DFIs 1,118,673 – 264,941 1,383,614

Total 4,575,387 115,781 58,396,118 63,087,285

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CREDIT RISk – DISCLOSURE FOR PORTFOLIOS UNDER THE STANDARDISED APPROACH (SA) (CONTINUED)

Table 13(a): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMBBG (Continued)

2010 CIMBBG

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet ExposuresCredit Exposures (using Corporate Risk weights) Public Sector Entities 834,219 – 25,404 859,623 Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 6,114 – – 6,114 Corporate 30,719 – 13,273,650 13,304,369Sovereign/Central Banks 7,175,257 – 27,015,885 34,191,143Banks, MDBs and DFIs 897,964 – 101,304 999,268

Total 8,944,273 – 40,416,243 49,360,517

Table 13(b): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMB Islamic

2011 CIMB Islamic

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet ExposuresCredit Exposures (using Corporate Risk weights) Public Sector Entities – – – – Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – Corporate – – 330,015 330,015Sovereign/Central Banks 348,556 – 14,941,411 15,289,967Banks, MDBs and DFIs 32,040 – – 32,040

Total 380,596 – 15,271,425 15,652,022

2010 CIMB Islamic

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet ExposuresCredit Exposures (using Corporate Risk weights) Public Sector Entities – – – – Insurance Cos/Takaful Operators, Securities Firms & Fund Managers – – – – Corporate – – 1,245,200 1,245,200Sovereign/Central Banks 167,970 – 11,666,650 11,834,620Banks, MDBs and DFIs – – – –

Total 167,970 – 12,911,850 13,079,820

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Table 13(c): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMBIBG

2011 CIMBIBG

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet ExposuresCredit Exposures (using Corporate Risk weights) Public Sector Entities – – – – Insurance Cos, Securities Firms & Fund Managers – – – – Corporate – – 51,015 51,015Sovereign/Central Banks – – 274,850 274,850Banks, MDBs and DFIs 2,146,942 575 1,352 2,148,870

Total 2,146,942 575 327,217 2,474,735

2010 CIMBIBG

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet ExposuresCredit Exposures (using Corporate Risk weights) Public Sector Entities – – – – Insurance Cos, Securities Firms & Fund Managers – – – – Corporate – – 32,802 32,802Sovereign/Central Banks – – 301,070 301,070Banks, MDBs and DFIs 2,398,976 – 99,912 2,498,887

Total 2,398,976 – 433,784 2,832,759

Table 14(a): Disclosures of Securitisation under SA according to Ratings by ECAIs for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet Exposures Securitisation 713,799 – 72,639 786,438

2010 CIMBBG

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet Exposures Securitisation 803,612 – 2,525 806,137

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Table 14(b): Disclosures of Securitisation under SA according to Ratings by ECAIs for CIMB Islamic

2011 CIMB Islamic

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet Exposures Securitisation 35,857 – – 35,857

2010 CIMB Islamic

(RM’000)Exposure Class

Investment Grade

Non Investment

Grade No Rating Total

On and Off-Balance-Sheet Exposures Securitisation 35,583 – – 35,583

As at 31 December 2011 and 31 December 2010, there is no Securitisation under SA according to Ratings by ECAIs for CIMBIBG.

CREDIT RISk – DISCLOSURE FOR PORTFOLIOS UNDER THE IRB APPROACH1

CIMBBG and CIMB Islamic adopt the A-IRB Approach for its retail exposures and F-IRB Approach for its non-retail exposures. The IRB Approach allows CIMBBG and CIMB Islamic to adopt various rating systems to measure its credit risk to both retail and non-retail exposures. The internal risk rating systems are used not only for regulatory capital purposes, but also for credit approval and risk management reporting.

For retail exposures, application scorecards are integral to the credit approval process. Credit officers use scorecard outputs in the determination of approval of a credit application. Behavioural scorecards are used to determine the future conduct of the account and predict potential revenue based on the behaviour pattern of the customer.

For non-retail exposures, internal ratings are used to assist the approving committees in making informed decisions of the credit application. Product owners consult GRM for input on internal rating for consideration on pricing of product.

The models used in the internal rating systems are subject to strict governance and controls. The models are developed and maintained by GRM with input from business units to ensure that material risks are captured. Before the models are implemented, they are subject to approval by GRC and subsequently BRC. After implementation, the models are subject to regular performance monitoring to ensure that they continue to perform as expected and the risk parameters remain appropriate.

New models are assessed by a validation team, which is independent from the development team, to ensure robustness of the model development process, completeness of the documentation, and accuracy of the risk estimates. The validation exercise also ensures that the models meet regulatory standards. Existing models are assessed on an annual basis by the validation team to ensure that the models continue to be appropriate and the risk estimates continue to be accurate.

Retail ExposuresRetail exposures are portfolio in large numbers of similarly managed exposures due to homogeneous characteristics. This applies to both exposures to individuals as well as exposures to small businesses which are managed on a pooled basis. The exposure of a single retail facility is typically low and usually referred as programme lending.

1 This section is not applicable to CIMBIBG.

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CREDIT RISk – DISCLOSURE FOR PORTFOLIOS UNDER THE IRB APPROACH (CONTINUED)

Retail Exposures (Continued)Retail exposures covered under the A-IRB Approach include credit cards, auto loans/financing, personal financing and residential mortgages. The PDs of these exposures are typically estimated from the outputs of application scorecards for newer customers and behavioural scorecards for older customers. Presently, the models deployed for retail portfolio include application and behavioural scorecards, PD, LGD and EAD2 segmentation.

PD, LGD and EAD Segmentation ModelsPD Calibration for Retail Exposure

• PD estimated for each pool must be representative of long term average. In the event the internal historical data is not sufficient to cover an economiccycle, appropriate adjustment (via Cycle Scaling Factor) must be incorporated based on proxy data which are relevant and of longer history to derive the long term average PD, which normally referred to “Central Tendency”.

EAD Segmentation Model

• The EAD estimation approach adopted is based on CohortMethod. A fixed length cohort, normally one year intervals is defined.

LGD Segmentation Model

• LGD for retail exposures is estimated based on historical internal data and the following sources of recoveries are incorporated into the estimation:

(i) Regularisation of defaulted accounts.

(ii) Sale proceeds from physical collaterals.

(iii) Cash receipts from borrowers/customers.

The following tables summarise the retail credit exposures measured under A-IRB Approach as at 31 December 2011 and 31 December 2010:

Table 15(a): Retail Credit Exposures by PD Band for CIMBBG

2011 CIMBBG

(RM’000)PD Range of Retail Exposures

0% ≤ PD < 2%

2% ≤ PD < 100%

100% Or Default Total

Total Retail Exposure (EAD) 47,802,942 11,362,386 1,935,717 61,101,044Residential Mortgage/RRE Financing 31,963,150 3,927,201 1,306,543 37,196,895QRRE 4,724,572 3,736,844 93,388 8,554,803Hire Purchase 7,666,730 2,633,505 288,282 10,588,517Other Retail 3,448,489 1,064,836 247,504 4,760,829

Exposure weighted LGD %Residential Mortgage/RRE Financing 23% 25% 36%QRRE 90% 90% 90%Hire Purchase 51% 37% 58%Other Retail 28% 91% 71%

Exposure weighted Average Risk weight %Residential Mortgage/RRE Financing 31% 86% 40%QRRE 33% 130% 123%Hire Purchase 55% 99% 187%Other Retail 30% 70% 371%

2 PD, EAD and LGD are Basel II risk parameters.Probability of Default (PD) is defined as the probability of a borrower defaulting within a one year time horizon.Exposure at Default (EAD) represents the expected level of usage of the facility when default occurs.Loss Given Default (LGD) is the estimated amount of loss expected if a loan defaults, calculated as a percentage of EAD. The value depends on the collateral (if any) and other factors (internal, external, direct and indirect costs associated with recoveries).

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Table 15(a): Retail Credit Exposures by PD Band for CIMBBG (Continued)

2010 CIMBBG

(RM’000)PD Range of Retail Exposures

0% ≤ PD < 2%

2% ≤ PD < 100%

100% Or Default Total

Total Retail Exposure (EAD) 39,968,984 14,231,579 2,094,961 56,295,525Residential Mortgage/RRE Financing 25,708,649 4,892,483 1,460,103 32,061,235QRRE 4,073,763 4,055,224 80,180 8,209,166Hire Purchase 6,900,583 3,602,799 292,094 10,795,475Other Retail 3,285,990 1,681,074 262,584 5,229,649

Exposure weighted LGD %Residential Mortgage/RRE Financing 22% 23% 34%QRRE 90% 28% 90%Hire Purchase 56% 31% 59%Other Retail 18% 67% 46%

Exposure weighted Average Risk weight %Residential Mortgage/RRE Financing 29% 84% 30%QRRE 33% 131% 387%Hire Purchase 60% 111% 214%Other Retail 19% 51% 228%

Table 15(b): Retail Credit Exposures by PD Band for CIMB Islamic

2011 CIMB Islamic

(RM’000)PD Range of Retail Exposures

0% ≤ PD < 2%

2% ≤ PD < 100%

100% Or Default Total

Total Retail Exposure (EAD) 10,707,205 2,210,391 178,945 13,096,541RRE Financing 5,895,872 523,355 67,433 6,486,660QRRE 63,092 104,089 4,565 171,747Hire Purchase 4,022,394 1,168,757 95,686 5,286,837Other Retail 725,847 414,190 11,261 1,151,298

Exposure weighted LGD %RRE Financing 25% 26% 38%QRRE 90% 90% 90%Hire Purchase 51% 53% 57%Other Retail 27% 61% 78%

Exposure weighted Average Risk weight %RRE Financing 32% 74% 14%QRRE 35% 135% 40%Hire Purchase 54% 97% 185%Other Retail 28% 108% 211%

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Table 15(b): Retail Credit Exposures by PD Band for CIMB Islamic (Continued)

2010 CIMB Islamic

(RM’000)PD Range of Retail Exposures

0% ≤ PD < 2%

2% ≤ PD < 100%

100% Or Default Total

Total Retail Exposure (EAD) 7,928,906 3,184,790 161,764 11,275,460RRE Financing 3,867,897 965,247 67,213 4,900,357QRRE 45,869 119,553 2,658 168,080Hire Purchase 3,453,553 1,549,193 79,898 5,082,644Other Retail 561,586 550,796 11,995 1,124,378

Exposure weighted LGD %RRE Financing 25% 25% 37%QRRE 90% 90% 90%Hire Purchase 57% 59% 59%Other Retail 16% 51% 51%

Exposure weighted Average Risk weight %RRE Financing 31% 85% 17%QRRE 35% 128% 225%Hire Purchase 61% 111% 186%Other Retail 16% 91% 98%

Table 16(a): Retail Exposures under the IRB Approach by Expected Loss Range for CIMBBG

2011 CIMBBG

(RM’000)EL Range of Retail Exposures EL ≤ 1%

1% < EL < 100% EL = 100% Total

Total Retail Exposure (EAD) 48,458,112 12,333,761 309,172 61,101,044Residential Mortgage/RRE Financing 33,798,886 3,204,809 193,199 37,196,895QRRE 3,117,053 5,437,751 – 8,554,803Hire Purchase 7,472,838 3,023,649 92,030 10,588,517Other Retail 4,069,335 667,552 23,942 4,760,829

Exposure weighted Average LGD %Residential Mortgage/RRE Financing 24% 29% 39%QRRE 90% 90% –Hire Purchase 51% 55% 58%Other Retail 28% 64% 79%

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Table 16(a): Retail Exposures under the IRB Approach by Expected Loss Range for CIMBBG (Continued)

2010 CIMBBG

(RM’000)EL Range of Retail Exposures EL ≤ 1%

1% < EL < 100% EL = 100% Total

Total Retail Exposure (EAD) 41,561,692 14,501,593 232,240 56,295,525Residential Mortgage/RRE Financing 27,924,815 3,938,894 197,525 32,061,235QRRE 2,830,425 5,378,741 – 8,209,166Hire Purchase 6,592,149 4,187,437 15,889 10,795,475Other Retail 4,214,303 996,521 18,825 5,229,649

Exposure weighted Average LGD %Residential Mortgage/RRE Financing 22% 27% 33%QRRE 90% 90% –Hire Purchase 55% 58% 56%Other Retail 17% 47% 49%

Table 16(b): Retail Exposures under the IRB Approach by Expected Loss Range for CIMB Islamic

2011 CIMB Islamic

(RM’000)EL Range of Retail Exposures EL ≤ 1%

1% < EL < 100% EL = 100% Total

Total Retail Exposure (EAD) 11,109,331 1,935,030 52,181 13,096,541RRE Financing 6,255,623 214,139 16,898 6,486,660QRRE 34,702 137,044 – 171,747Hire Purchase 3,973,470 1,282,829 30,538 5,286,837Other Retail 845,536 301,018 4,744 1,151,298

Exposure weighted Average LGD %RRE Financing 25% 29% 44%QRRE 90% 90% –Hire Purchase 51% 54% 56%Other Retail 27% 75% 80%

2010 CIMB Islamic

(RM’000)EL Range of Retail Exposures EL ≤ 1%

1% < EL < 100% EL = 100% Total

Total Retail Exposure (EAD) 8,491,032 2,758,921 25,507 11,275,460RRE Financing 4,338,029 543,508 18,820 4,900,357QRRE 23,268 144,812 – 168,080Hire Purchase 3,360,293 1,719,663 2,688 5,082,644Other Retail 769,442 350,938 3,998 1,124,378

Exposure weighted Average LGD %RRE Financing 25% 26% 44%QRRE 90% 90% –Hire Purchase 57% 59% 53%Other Retail 15% 72% 70%

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Non-retail ExposuresNon-retail exposures covered under the F-IRB Approach include corporates (Specialised Lending/Financing uses supervisory slotting criteria), SMEs and banks. The PDs of these exposures are estimated from internal ratings assigned across a spectrum of risk levels on a master scale. Each internal rating has a corresponding 1-year average PD and a likely corresponding regulatory loan/financing classification.

The process by which an internal rating is assigned to an obligor is governed by the Obligor Risk Rating framework. Firstly, a risk model uses a weighted combination of quantitative and qualitative risk factors to generate an initial rating. The quantitative risk factors and weights are derived through statistical techniques and the qualitative risk factors and weights are derived through deliberation with credit experts. The initial rating may subsequently be upgraded or downgraded based on a predefined set of criteria, such as quality of financial statements and support from a parent entity. Finally, an approving authority deliberates before deciding on a final rating. If a facility is guaranteed by one or more corporate guarantors, then the framework recognises the credit risk mitigation by upgrading the final rating accordingly.

For sovereign exposures with external ratings, the internal rating is taken to correspond to the second best long-term issuer rating published by S&P, Moody’s and Fitch or any other rating agencies approved by approving authority based on the Group’s internal rating system.

The following tables summarise the Group’s non-retail credit exposures measured under F-IRB Approach as at 31 December 2011 and 31 December 2010:

Table 17(a): Credit Exposures Subject to Supervisory Risk Weight under IRB Approach for CIMBBG

2011 CIMBBG

(RM’000)Supervisory Categories Strong Good Satisfactory weak Default Total

Project Finance 352,385 14,185 681,138 1,354 997,754 2,046,816Object Finance 12,990 – 266,875 32,676 – 312,541Commodities Finance – – – – – –Income Producing Real Estate 1,020,623 1,191,516 782,325 94,810 9,833 3,099,107

RwA 940,669 970,200 1,989,890 322,099 – 4,222,857

2010 CIMBBG

(RM’000)Supervisory Categories Strong Good Satisfactory weak Default Total

Project Finance 502,976 – 7,171 363,128 928,761 1,802,036Object Finance – – 214,409 93,834 – 308,243Commodities Finance – – – – – –Income Producing Real Estate 1,047,838 435,531 338,172 3,169 65,933 1,890,643

RwA 901,617 338,402 643,714 1,150,327 – 3,034,060

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Non-retail Exposures (Continued)Table 17(b): Credit Exposures Subject to Supervisory Risk Weight under IRB Approach for CIMB Islamic

2011 CIMB Islamic

(RM’000)Supervisory Categories Strong Good Satisfactory weak Default Total

Project Finance 155,768 – 6,210 – – 161,978Object Finance – – 266,875 – – 266,875Commodities Finance – – – – – –Income Producing Real Estate 16,132 236,883 24,232 14,904 – 292,151

RwA 118,507 189,664 341,915 37,259 – 687,345

2010 CIMB Islamic

(RM’000)Supervisory Categories Strong Good Satisfactory weak Default Total

Project Finance – – 7,151 – – 7,151Object Finance – – 173,615 93,834 – 267,449Commodities Finance – – – – – –Income Producing Real Estate 152,435 8,181 53,848 – – 214,465

RwA 92,581 7,363 269,806 234,585 – 604,334

CIMBBG and CIMB Islamic have no exposure to High Volatility Commercial Real Estate and Equities under the Simple Risk Weight Approach.

Table 18(a): Non Retail Exposures under IRB Approach by Risk Grades for CIMBBG

2011 CIMBBG

(RM’000)Internal Risk Grading 1-6 7-12 13 Default Total

Total Non-Retail Exposure (EAD) 46,060,754 20,611,796 3,352,354 3,954,891 73,979,796Bank 17,061,122 1,056,457 556,477 160,136 18,834,192Corporate (excluding Specialised Lending/Financing) 28,999,632 19,555,339 2,795,878 3,794,755 55,145,604

Exposure weighted LGD %Bank 46% 50% 45% 45%Corporate (excluding Specialised Lending/Financing) 43% 38% 35% 44%

Exposure weighted Average Risk weight %Bank 19% 97% 225% –Corporate (excluding Specialised Lending/Financing) 26% 76% 191% –

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Non-retail Exposures (Continued)Table 18(a): Non Retail Exposures under IRB Approach by Risk Grades for CIMBBG (Continued)

2010 CIMBBG

(RM’000)Internal Risk Grading 1-6 7-12 13 Default Total

Total Non-Retail Exposure (EAD) 45,092,627 19,387,383 4,505,611 4,079,787 73,065,408Bank 19,627,545 525,168 103,324 61,670 20,317,706Corporate (excluding Specialised Lending/Financing) 25,465,083 18,862,216 4,402,287 4,018,117 52,747,702

Exposure weighted LGD %Bank 46% 50% 45% 45%Corporate (excluding Specialised Lending/Financing) 43% 40% 37% 44%

Exposure weighted Average Risk weight %Bank 20% 97% 247% –Corporate (excluding Specialised Lending/Financing) 26% 84% 184% –

Table 18(b): Non Retail Exposures under IRB Approach by Risk Grades for CIMB Islamic

2011 CIMB Islamic

(RM’000)Internal Risk Grading 1-6 7-12 13 Default Total

Total Non-Retail Exposure (EAD) 4,201,671 2,729,580 411,943 140,810 7,484,003Bank 2,031,203 16,120 – – 2,047,323Corporate (excluding Specialised Financing) 2,170,468 2,713,460 411,943 140,810 5,436,680

Exposure weighted LGD %Bank 45% 45% – –Corporate (excluding Specialised Financing) 40% 40% 37% 44%

Exposure weighted Average Risk weight %Bank 20% 100% – –Corporate (excluding Specialised Financing) 24% 74% 170% –

2010 CIMB Islamic

(RM’000)Internal Risk Grading 1-6 7-12 13 Default Total

Total Non-Retail Exposure (EAD) 4,345,940 1,719,892 286,085 141,785 6,493,701Bank 2,113,704 3,330 – – 2,117,034Corporate (excluding Specialised Financing) 2,232,236 1,716,562 286,085 141,785 4,376,667

Exposure weighted LGD %Bank 45% 45% – –Corporate (excluding Specialised Financing) 44% 37% 35% 44%

Exposure weighted Average Risk weight %Bank 22% 149% – –Corporate (excluding Specialised Financing) 32% 73% 162% –

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The following tables summarise the actual losses by portfolio type:

Table 19(a): Analysis of Expected Loss versus Actual Losses by Portfolio Types for CIMBBG

CIMBBG

(RM’000)Exposure Class

Regulatory Expected Losses as at 31 December 2010

Actual Losses for the year ended 31 December 2011

Sovereign – –Bank 19,442 –Corporate 599,851 137,609Mortgage/RRE Financing 187,107 66,621HPE 377,603 170,780QRRE 366,228 243,725Other Retail 73,758 30,214

Total 1,623,990 648,949

Table 19(b): Analysis of Expected Loss versus Actual Losses by Portfolio Types for CIMB Islamic

CIMB Islamic

(RM’000)Exposure Class

Regulatory Expected Losses as at 31 December 2010

Actual Losses for the year ended 31 December 2011

Sovereign – –Bank 806 –Corporate 47,020 13,459RRE Financing 32,268 (99)HPE 157,487 33,898QRRE 9,751 10,901Other Retail 39,866 7,956

Total 287,198 66,115

Actual loss refers to impairment provisions and direct write-offs, if any during the year.

On the other hand, EL measures the loss expected from non-defaulted exposures at the start of the year. It is computed based on the risk parameters of the adopted IRB Approach. While a comparison of actual losses and EL provides some insight of the predictive power of the IRB Approach models used by the Group, the two metrics are not directly comparable due to the differences in methodology.

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CREDIT RISk MITIGATION

The employment of various credit risk mitigation techniques such as appropriate credit structuring, and posting of collateral and/or third party support form an integral part of the credit risk management process. Credit risk mitigants are taken where possible and is considered secondary recourse to the obligor for the credit risk underwritten.

Collaterals/SecuritiesAll extension of credit in so far as deemed prudent, must be appropriately and adequately secured. A credit proposal is considered secured only when the entire proposal is fully covered by approved collateral/securities within their approved margins as set out in the relevant credit policy guides. GWBRC/RCC is empowered to approve any inclusion of new acceptable collaterals/securities.

Recognised collaterals include both financial and physical assets. Financial collaterals consist of mainly cash deposits, shares, unit trusts and debt securities, while physical collateral includes land and buildings and vehicles. Guarantors accepted are in line with BNM’s RWCAF and CAFIB guidelines. Eligible credit protection is also used to mitigate credit losses in the event that the obligor/counterparty defaults.

Collateral Valuation and ManagementThe Group has in place policies which govern the determination of eligibility of various collaterals including credit protection, to be considered for credit risk mitigation which includes the minimum operational requirements that are required for the specific collateral to be considered as effective risk mitigants.

The collateral is valued periodically ranging from daily to annually, depending on the type of collateral. Specifically for real estate properties, a framework for valuation of real estate properties is established to ensure adequate policies and procedures are in place for efficient and proper conduct of valuation of real estate properties and other related activities in relation to the interpretation, monitoring and management of valuation of real estate properties.

NettingIn mitigating the credit risks in swaps and derivative transactions, the Group enters into master agreements that provide for closeout and settlement netting arrangements with counterparties, whenever possible. A master agreement that governs all transactions between two parties, creates the greatest legal certainty that credit exposure will be netted. In effect, it enables the netting of outstanding obligations upon termination of outstanding transactions if an event of default occurs.

Concentrations within risk mitigationCIMB Group avoids unwanted credit or market risk concentrations by diversifying its portfolios through a number of measures. Amongst others, there are guidelines in place relating to maximum exposure to any counterparty, sectors and country.

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CREDIT RISk MITIGATION (CONTINUED)

Concentrations within risk mitigation (Continued)The following tables summarise the extent of which exposures are covered by eligible credit risk mitigants as at 31 December 2011 and 31 December 2010:

Table 21(a): Disclosure on Credit Risk Mitigation for CIMBBG

2011 CIMBBG

(RM’000)Exposure Class

Exposures before CRM

Exposures Covered by

Guarantees/Credit

Derivatives

Exposures Covered by

Eligible Financial

Collateral

Exposures Covered by

Other Eligible Collateral

Performing ExposuresSovereign/Central Banks 47,234,212 – – –Public Sector Entities 397,756 – 89,967 –Banks, DFIs & MDBs 20,119,694 – 675,689 –Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 81 – – –Corporate 69,894,639 1,375,533 4,917,257 6,214,854Residential Mortgages/RRE Financing 40,884,785 – – –Qualifying Revolving Retail 8,461,416 – – –Hire Purchase 10,300,236 – – –Other Retail 30,553,088 1,387 4,506,495 –Securitisation 696,251 – – –Higher Risk Assets 1,231,512 – – –Other Assets 5,770,276 – – –

Defaulted Exposures 3,149,564 9,578 33,515 426,043

Total Exposures 238,693,509 1,386,498 10,222,922 6,640,897

The type of collateral recognised in each asset class is in accordance to the approach adopted in computing the RWA. The CRM shown is computed after taking into account the haircut as prescribed by the guidelines. For assets under SA, only financial collateral and guarantee are recognised. For assets under F-IRB Approach, guarantee, financial collateral and other eligible collateral are recognised. For assets under A-IRB Approach, the collateral has been taken into consideration in the computation of LGD, hence, excluded from the CRM disclosure.